Ruble Climbs as Goldman, Danske Upgrade Forecast on Oil Bets

  • Danske sees Russian currency at 66.4 in three months' time
  • Brent crude oil erases earlier decline, extends month's gain

The ruble rebounded as Goldman Sachs Group Inc. and Danske Bank A/S raised forecasts for the currency, predicting further gains in its world-beating rally as oil prices stabilize and Russia holds back from cutting interest rates.

The currency strengthened 0.8 percent against the dollar to 67.963 by 4:41 p.m. in Moscow, after falling 1.1 percent earlier and taking its advance in the past month to 14 percent, the most worldwide. Brent oil rose 1.2 percent in London trading to $41.69 a barrel, extending its gain to 16 percent since the end of February.

A central bank warning on Friday that policy will remain “moderately tight” took investors by surprise and bolstered appetite for the currency of the world’s biggest energy exporter. The ruble’s 120-day correlation to Brent is close to a record, and Danske Bank predicted the ruble will follow an upward curve for crude, strengthening almost 3 percent over the next three months. Goldman Sachs sees it up 9.6 percent in 12 months.

“The ruble continues to be the best play among oil producers on a rising oil price," Vladimir Miklashevsky, strategist at Danske Bank in Helsinki, said by e-mail. "Oil futures now point to further strengthening, and subdued domestic demand for foreign currency props up this trend."

Upgrading Forecasts

Miklashevsky revised his earlier three-month forecast for the ruble to 66.4 per dollar compared with 81 previously. He sees the currency at 62.20 in 12 months. Goldman Sachs predicts the ruble will reach 62 in 12 months, from 66 forecast earlier, according to Kamakshya Trivedi, chief emerging markets macro strategist.

While the ruble remains "subject to the vagaries of the oil price," Bank of Russia’s tendency to hold back on delivering rate cuts supports our constructive view" on the currency, Trivedi said in a note to clients.

As analysts rush to upgrade their views on the ruble, the median forecast still calls for the currency’s weakening to 72.90 in the second quarter.

Russia’s Micex Index of major stocks fell 0.9 percent to 1,897.51, sliding for the first time in four days. The yield on five-year government notes rose five basis points to 9.17 percent after declining 46 points in three previous sessions.

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