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Ruble Rises Third Day to Dollar as Monthly Taxes Stoke Demand

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Jan. 23 (Bloomberg) -- The ruble rose for a third day against the dollar as monthly tax payments boosted demand for the Russian currency.

The ruble climbed as much as 0.3 percent and traded up 0.2 percent at 30.1750 per dollar by 4:19 p.m. in Moscow. It was down 0.2 percent at 40.2775 against the euro and steady at 34.7186 percent against Bank Rossii’s target dollar-euro basket.

Demand for ruble liquidity from corporate taxpayers and banks will lead to further strengthening in the coming weeks, according to VTB Capital. The MosPrime interbank overnight lending rate rose 13 basis points yesterday to 5.88 percent, the highest level since Jan. 9, before retreating to 5.48 percent today. Demand for rubles at the central bank’s morning repo auction today was more than four times the 10 billion rubles ($332 million) offered, the regulator’s data show.

“Interest rates will rise to 6 percent and higher by the end of this week and start of the next week,” Dmitry Polevoy, an analyst at ING Groep NV, wrote in an e-mailed note.

Crude oil, Russia’s biggest export, rose 0.1 percent in New York to $96.81 per barrel. The JPMorgan Emerging Markets Local Currencies Index declined 0.1 percent to 390.557 yesterday.

VTB Capital sees additional support for the ruble from foreign investors once the government’s local-currency bonds, known as OFZs, can be settled through international systems such as Euroclear Bank SA and Clearstream International SA.

“We expect some additional inflows to the OFZ market once Euroclear becomes operational, which we still expect to happen by the end of January,” VTB Capital analysts Maxim Korovin and Anton Nikitin wrote in an e-mailed note.

Euroclear has received a letter from Russia’s markets watchdog responding to a request for details of local bond market legislation, Euroclear spokesman Martin Gregson said yesterday.

Ruble futures expiring in March showed the currency at 30.414 per dollar.

To contact the reporter on this story: Vladimir Kuznetsov in Moscow at vkuznetsov2@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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