- Currency reverses gains after U.S. crude stockpiles increase
- Bonds gain first time in 11 days as debt auction demand rises
The ruble fell for a seventh day and bonds gained as Brent crude trading below $44 a barrel curbed bets the Russian central bank will cut interest rates on Friday.
The currency reversed earlier gains and weakened as much as 0.7 percent as oil fell to a near eight-week low after data showed U.S. stockpiles unexpectedly increased.
The ruble’s 5.4 percent depreciation over seven days has reduced chances the Bank of Russia will lower the benchmark rate of 10.5 percent at the next meeting on Friday, Rosbank PJSC said. Derivatives traders have trimmed odds on an easing in the next three months, with forward-rate agreements now showing 54 basis points of cuts compared with 61 basis points a week ago, the highest since early June.
“There’s not much chance of a rate cut on Friday," said Yury Tulinov, head of research at Rosbank in Moscow, said by e-mail. "The ruble is mirroring the move in oil."
The ruble traded 0.4 percent lower at 66.2350 per dollar by 5:48 p.m. in Moscow as Brent, used to price the country’s main export blend, fell 2.4 percent to $43.81 a barrel. Stockpiles in the U.S. climbed 1.67 million barrels, the Energy Information Administration report showed. Analysts surveyed by Bloomberg ahead of the release had expected a crude inventory decline of 2 million barrels in the week ended July 22.
Russian government bonds advanced for the first time in 11 days and the Finance Ministry sold debt with the highest bid-to-cover ratio in more than a month. The yield on 10-year ruble bonds, known as OFZs, slipped four basis points to 8.65 percent, the first decrease since July 12, data compiled by Bloomberg showed.
The Finance Ministry sold all 15 billion rubles ($227 million) of September 2026 fixed-coupon OFZ bonds at 8.75 percent, in line with yesterday’s closing yield. The ministry also sold all 10 billion rubles of January 2020 floating-rate securities on offer at a separate auction on Wednesday.