Ruble Slides as Tax Boost Damped by Debt, Bank of Russia Sales

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The ruble headed for the lowest level in a week as support from monthly tax deadlines subsided and investors turned their attention to the Bank of Russia’s dollar purchases and companies’ foreign debt payments.

The Russian currency weakened 1.3 percent to 54.6350 per dollar by 4:21 p.m. in Moscow, extending its drop this month to 4.2 percent, the most among 24 emerging markets tracked by Bloomberg. Government bonds fell, lifting the yield on five-year ruble debt four basis points to 11.16 percent.

Companies have accumulated the rubles they need to pay the equivalent of about $10 billion in local tax this week, bringing concern over looming external debt redemptions and dividend payments to foreigners to the fore, according to VTB Capital. The Bank of Russia has bought almost $5 billion on the market since May 13 as it seeks to gradually boost its foreign currency reserves to $500 billion from $361 billion.

“As soon as the visible demand for rubles, related to taxes, disappears for some reason, all sorts of negatives spring out,” Konstantin Artemov, money manager at Raiffeisen Capital in Moscow, said in e-mailed comments. “These include the central bank purchasing foreign currency, geopolitical risks and the risk of a lower oil price.”

Companies face $17.9 billion of foreign debt payments in June and July, central bank data show. Crude oil, which together with natural gas accounts for about 50 percent of Russia’s budget revenue, lost 0.6 percent to $62.96 per barrel in London trading. The benchmark Micex stock index fell 0.6 percent to 1,662.51.

The Finance Ministry will offer 17.5 billion rubles ($321 million) of bonds in auctions on June 24, according to a website statement. If successful, the ministry will meet its 250 billion rubles borrowing plan for the quarter, the first time since 2011.

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