Ruble Retreats From Central Bank Intervention Zone as Oil Drops

The ruble weakened, retreating from the level at which traders say the central bank may intervene to curb gains, as crude oil slid.

The Russian currency fell 0.1 percent against the central bank’s dollar-euro basket to 34.6616 by 7 p.m. in Moscow after closing stronger than 34.65 yesterday, the first time since Jan. 24. According to traders, 34.65 marks the level beyond which Bank Rossii may intervene to curb excessive ruble strengthening. The ruble dropped 0.1 percent against the dollar to 30.1240 for a 0.2 percent decline in the week.

Crude, Russia’s main export earner, dropped 1.1 percent to $116.65 a barrel in London, accelerating the decline after the U.S. reported a 0.1 decline in industrial production in January. Bank Rossii bought about $600 million and 48 million euros ($64 million) to slow the currency’s advance in January, the regulator said on its website.

“So far there are no specific interventions, but everybody knows they start below 34.65, so nobody is rushing there,” Dmitry Sinitsyn, head of forex operations at Credit Suisse Moscow, said by e-mail.

The monthly taxation period, when exporters sell foreign currency to pay ruble taxes, started today with obligatory contributions to the pension fund, providing support for the ruble.

The currency will weaken once the tax payment period ends, according to Artem Roschin, forex trader at Aljba Alliance in Moscow.

“It makes more sense to start thinking about a long position in the basket, keeping in mind the end of the tax period,” Roschin said. The ruble may weaken to 34.80-34.90 against the basket from current level.

Russian government bonds were unchanged with the yield on notes due 2027 unchanged at 7.06 percent.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE