The ruble strengthened, narrowing a fourth straight monthly decline, as oil headed for a gain in February for the first time since October and hedge funds increased bullish bets on the Russian currency.
The ruble advanced 0.1 percent to 76.112 per dollar by 12:32 p.m. in Moscow, easing the decline in February to 0.9 percent. The ruble has recovered 5.9 percent from a low on Feb.
The ruble will remain dependent on oil prices and the behavior of global central banks, which affect investors’ appetite for risk, according to Denis Davydov, an analyst at Nordea Bank in Moscow. The ruble’s correlation to oil is 0.83, close to the record high of 0.86 in October.
“The ruble will be dominated by the oil price and talks with OPEC at least until the middle of March,” Davydov said. “It has a perfect chance to gain about 5 percent from here if oil confirms it has bottomed out and moves firmly above $35 per barrel.”
Crude oil was little changed at $35.07 per barrel in London on Monday, paring an increase for the month to 0.9 percent. Hedge funds and other large speculators increased net long ruble positions to 1,434 futures in the week ended February 23 from 1,228 contracts in the prior five trading days, U.S. Commodity Futures Trading Commission data show.
If oil recovers to $40, the ruble may climb to 70 against the dollar, a level last seen in December, Dmitriy Kosmodemiyanskiy, a money manager at Otkritie Asset Management in Moscow, said by e-mail.
The yield on five-year notes fell one basis point to 9.82 percent, extending the decline in February to 51 basis points. The Micex Index of stocks dropped 0.1 percent to to 1,814.35, paring its advance this month to 1.7 percent.