Ruble Rallies for Third Day as Local Taxes Offset Oil Declines

  • Sberbank estimates companies face $13.5 billion tax payment
  • Finance Ministry will offer 20b rubles of bonds tomorrow

Russia’s ruble strengthened for a third day as companies converted foreign-currency revenue to pay local taxes, eclipsing the impact of a drop in oil prices.

The currency of the world’s biggest energy exporter gained 0.5 percent to 63.9750 per dollar as of 6:46 p.m. in Moscow, even as Brent crude fell for the first time in three days.

Local markets rallied on Friday and Monday amid a more than 7 percent jump in Brent and optimism the U.K. will vote to remain in the European Union in a referendum on June 23, boosting demand for riskier assets. While stocks and bonds halted their advance as oil declined on Tuesday, the ruble gained in the runup to tax payments.

“Exporters are increasing their ruble purchases before the tax season begins,
which is boosting the currency,” Alexei Egorov, an analyst at Moscow-based
Promsvyazbank, said by phone.

Russian companies have about 869 billion rubles ($13.5 billion) in monthly taxes to pay on June 27 and June 28 and the purchases typically support the currency, according to Sberbank CIB.

The yield on five-year notes rose three basis points on to 8.96 percent. Sales of oil and natural gas account for about a third of Russia’s budget revenue.

Brent declined 1.4 percent to $49.93 per barrel on Tuesday after a 3 percent jump the day before.

Bonds also declined before a government auction on Wednesday. The Finance Ministry plans to offer 15 billion rubles of August 2021 OFZs and 5 billion rubles of December 2017 floaters.

The Micex stock index declined 0.2 percent to 1,898.88 at 6:38 p.m. in Moscow. The gauge is trading at 6.7 times estimated earnings, compared with about 5.6 times at the start of the year, data compiled by Bloomberg show. 

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