The ruble weakened for a fourth day against the central bank’s target basket of currencies as oil in London fell below $100 a barrel.
The ruble declined less than 0.1 percent against Bank Rossii’s dollar-euro basket, extending yesterday’s 1 percent drop, to 35.7784 by 6 p.m. in Moscow. The Russian currency appreciated 0.3 percent against the dollar to 31.3630. The yield on benchmark OFZ bonds due February 2027 declined five basis points, or 0.05 percentage point, to 7.14 percent
“Oil is the main newsmaker,” Artem Roschin, a foreign exchange trader at Aljba Alliance LLC in Moscow, said by phone. “The market is watching whether it stalls, continues to decline or reverses.”
Brent oil sank below $100 a barrel for the first time since July, dropping 1 percent to $99.61 a barrel amid signs global economic growth may slow. The ZEW Center for European Economic Research in Mannheim said today its index of investor and analyst expectations, which aims to predict economic developments six months in advance, fell to 36.3 from a three-year high of 48.5 in March.
Sberbank CIB and OAO Rosbank recommended investors buy long-dated OFZ bonds, arguing that ruble’s decline increases the dollar-based appeal of local debt. Expectations of interest rate cuts also support buying the notes, they said.
The sensitivity of OFZ bonds to oil declines as non-residents boost their holdings after the market was opened up earlier this year, the Rosbank analysts led by Vladimir Kolychev said in an e-mailed note to clients.
Two-year dollar-ruble swaps fell 10 basis points, the most in a month, to 5.81 percent, reflecting increased bets on interest-rate cuts.
“Market players are increasingly pricing in the possibility of a rate cut,” Tradition UK analysts wrote in an e-mailed note.
Russia’s central bank will cut interest rates at least 25 basis points in the second quarter, according to the median forecast in a Bloomberg survey.