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Ruble Extends Second Weekly Gain Amid Oil Rally, Tax Payments

July 19 (Bloomberg) -- The ruble strengthened, climbing for a second week, as crude rallied and companies paid local taxes.

The ruble rose 0.3 percent versus the dollar to 32.3850 by 6 p.m. in Moscow, when the central bank stops its open market transactions. The currency gained 0.8 percent in the week. The yield on benchmark OFZ bonds due February 2027 declined three basis points, or 0.03 percentage point, to 7.57 percent, an 18 basis-point drop in the week.

Oil, Russia’s main export earner, rose for a third day, adding 0.3 percent to $108.56 per barrel. The tax period in the world’s biggest energy exporter continues July 22. The payments support the currency as companies convert export revenue into rubles.

“Normally the July period is one of the largest for tax payments” at about 1.1 trillion rubles ($34 billion), or about 100 billion rubles more than in June, Vladimir Miklashevsky, a trading desk strategist at Danske Bank A/S in Helsinki, said in e-mailed comments.

The ruble climbed this week as investors speculated that the Federal Reserve will keep stimulus measures in place, boosting appetite for riskier, emerging-market assets. Chairman Ben S. Bernanke told lawmakers that the central bank’s $85 billion of monthly bond purchases “could be reduced more quickly or expanded” depending on the pace of recovery in the U.S.

The ruble was little changed at 36.9370 against the dollar-euro basket and 42.49 against the euro. JPMorgan Chase & Co.’s Emerging Currencies Index was steady at 91.28.

In the coming weeks the ruble will “depend mostly on the Fed’s tapering expectations, which will be influenced by U.S. labor statistics,” Miklashevsky said. “What is bad for the U.S. economy will be good for the ruble.”

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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