Ruble Weakens Third Day as BlackRock Trims Holdings After Rally

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Russia’s attempt to tame the world’s best currency rally this year by selling the ruble is working as Credit Agricole CIB says the exchange rate is stabilizing and BlackRock Inc.’s developing-nation team trims ruble holdings.

The nation’s central bank and Finance Ministry announced in the past week that they’ve started buying foreign currencies, helping drive a 1.5 percent retreat in the last three days. While BlackRock was long on the ruble earlier this year, it’s now paring the position, Sergio Trigo Paz, the head of emerging-market fixed income at BlackRock, told reporters in London.

“The government wants to keep the benefits of the weaker ruble to take care of external competitiveness,” Sebastien Barbe, Paris-based head of emerging-markets research and strategy at Credit Agricole CIB, said by e-mail. “I expect interventions to remain in place to limit the ruble appreciation.”

It’s in Russia’s interest to have the ruble move more in line with oil as it seeks cash to fund what analysts project will be the widest budget deficit as a percentage of economic output since 2010. The price of Brent crude in ruble terms is trading below its five-year average, curtailing revenue.

The ruble weakened 0.3 percent to 49.8720 per dollar by 8:55 p.m. on Thursday, with the scope for further gains seen as limited as policy makers step in to stem a 22 percent rally this year that’s eroding export earnings.

Oil Gains

The currency declined even as oil, Russia’s main export earner, advanced 1.9 percent to $66.26 a barrel in London, bringing this year’s gain to 16 percent.

OAO Lukoil, Russia’s largest privately held oil company, rose for the first time in seven days, adding 1.7 percent. The Micex Index of equities climbed for the first time in four days, adding 1.4.

VTB Group, the nation’s second-biggest lender, increased 4.3 percent, the highest since Nov. 2011, while OAO Novolipetsk Steel, Russia’s largest steelmaker, advanced 4.7 percent after reporting a first-quarter earnings increase.

Five-year government bonds rose for a second day, reducing the yield 16 basis points to 10.63 percent, the lowest since May 6.

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