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Ruble Pares Monthly Loss on Crude Advance

Oct. 31 (Bloomberg) -- The ruble strengthened as crude oil, Russia’s main export earner, rose for a second day.

The currency advanced less than 0.1 percent to 31.34 per dollar, paring the monthly loss to 0.5 percent by the close in Moscow. The currency weakened less than 0.1 percent to 40.6500 versus the euro and 35.5295 against the central bank’s euro-dollar basket.

Oil gained 1.4 percent to $86.9 a barrel in New York, while Urals, Russia’s main export blend, added 0.3 percent to $108.32, climbing for a second day. Crude and natural gas account for about 50 percent of Russia’s state revenue. Home prices in the U.S. rose this year through August by the most in two years, a report showed yesterday.

“Oil is a piece of the broader picture, which is supportive,” Vladimir Osakovskiy, the chief economist for Bank of America Merrill Lynch in Moscow, said by e-mail.

The ruble has depreciated 7.5 percent from this year’s peak of 28.9925 per dollar reached on March 26 when oil traded $2.74 from a high of $109.77 a barrel, data compiled by Bloomberg show. Russia’s currency lost 1.8 percent last week, the biggest five-day decline since June.

Bank Rossii is due to review interest rates in the first ten days of November. The central bank is likely to leave the refinancing rate on hold at 8.25 percent, according to a median estimate of 19 economists surveyed by Bloomberg.

Non-deliverable forwards showed the ruble at 31.8105 per dollar in three months, compared with 31.8255 per dollar yesterday. Bank of America estimates the ruble at 34.3 versus the basket by year-end, according to Osakovskiy.

The extra yield investors demand to own Russia’s dollar bonds over U.S. Treasuries was unchanged at 188, according to JPMorgan Chase & Co.’s EMBI Global Index. An index of five-year government bond yields lost one basis point to 7.07 percent.

To contact the reporter on this story: Maria Levitov in London at mlevitov@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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