Ruble Holds Firm as Official Moots Return of Dollar Purchases

Updated on
  • Ruble unlikely to strengthen past 60 before year-end: Sberbank
  • Rosbank sees Moiseev's comment as reminder of reserves target

The ruble held its ground as oil stayed above $50 a barrel and analysts played down suggestions by a Russian deputy finance minister that the nation’s central bank should resume dollar purchases.

The currency climbed 0.8 percent to 66.5820 against the dollar by 5:21 p.m. in Moscow after weakening 4.2 percent over the two previous days. The yield on five-year government notes dropped five basis points to 11.87 percent. Brent crude added 1.8 percent to $51.39 a barrel after gaining 1.9 percent yesterday.

Russian Deputy Finance Minister Alexey Moiseev told reporters the central bank should return to foreign-currency purchases closer to the last three months of the year. The Bank of Russia stopped daily purchases of dollars in July, suggesting Russian policy makers were getting uncomfortable with the pace of the ruble’s slide after introducing them in mid-May as the ruble strengthened to a 2015 high.

“The suggestion that the Bank of Russia could restart foreign-currency purchases likely relies on the ruble strengthening from its current levels first,” said Tom Levinson, the chief foreign-exchange and rates strategist at Sberbank CIB in Moscow. It’s “unlikely” that the ruble will strengthen this year past 60 per dollar, the level at which purchases were halted at the end of July, he said.

Options show the probability of the ruble strengthening beyond 60 against the dollar by the end of September is 5.9 percent. While the ruble is volatile, it isn’t in a long-term weakening trend, Bank of Russia First Deputy Governor Sergey Shvetsov said at a banking forum in Sochi.

Reserves Target

The central bank doesn’t set any specific macroeconomic indicators for restarting or halting foreign-currency purchases, its press service said by e-mail. Policy makers will decide on resuming the replenishment of reserves based on the situation in the Russian currency market, global markets and the Russian economy, it said.

The ruble price of Brent climbed 2 percent to 3,453. Russia, the world’s largest energy exporter, gets half of its budget revenue from the sale of oil, products and natural gas.

Moiseev’s comments are a “reminder” to the market that the central bank has a $500 billion target for its international reserves, said Yury Tulinov, head of research at Rosbank PJSC in Moscow. The ruble is being affected by oil and elevated market volatility, he said.

The Micex index of stocks added 1 percent, with Polyus Gold International Ltd. jumping 1.9 percent to 199.30 rubles. Wandle Holdings Ltd. and its Sacturino Ltd. unit, controlled by the son of billionaire Suleiman Kerimov, are considering an offer to buy the shares of the gold miner they don’t already own for $2.97 each, Sacturino said in a statement late Wednesday.

Preferred shares of Bashneft PJSC and of Tatneft PJSC rose 3.9 percent and 3.5 percent respectively as FTSE International Ltd. added the two companies into its all-world index during the semi-annual index review. VTB Capital expects $11 million of passive inflows into Bashneft’s preferred shares and $14 million into Tatneft preferred stocks by Vanguard index funds, analyst Ilya Piterskiy said in an e-mailed note.

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