Ruble Advances Most in a Month as Crude, Global Markets Rebound
The ruble climbed the most in more than a month versus the dollar as the prospect of an Irish bank bailout buoyed investor appetite for riskier assets and oil prices rebounded from a four-week low.
Russia’s currency recovered from a five-month low against the dollar, strengthening 1.2 percent to 30.9925 per dollar, the biggest intraday jump since Oct. 5. It extended gains after the central bank said the band it allows the managed ruble to trade within against a basket of dollars and euros had been shifted.
All the emerging-market currencies tracked by Bloomberg advanced against the dollar today as European Union and International Monetary Fund officials discuss possible aid for Ireland’s debt-laden banks at a meeting in Dublin, bolstering expectations of a resolution to Europe’s debt crisis. Crude snapped a four-day losing streak, rising as much as 2.3 percent to $82.25 a barrel in New York as the improvement in global risk appetite spurred investors to return to commodities.
“All of the adversarial factors that have been working against the ruble have to some degree reversed,” Yaroslav Lissovolik, chief economist in Moscow at Deutsche Bank AG, the world’s largest currency trader, said by phone. “There is a more positive tone in global markets and the risk factors for emerging-market currencies like the ruble have moderated somewhat.”
The currency also snapped a four-day decline against the dollar-euro basket, gaining 0.6 percent to 36.0831 by the 5 p.m. close of trading in Moscow. The basket is made up of about 55 percent dollars and 45 percent euros and is used to limit swings in the ruble that disadvantage Russian exporters. The currency was little changed at 42.3050 per euro.
Bank Rossii has extended the weak end of the ruble’s so- called “floating corridor” against the basket by 5 kopeks, First Deputy Chairman Alexei Ulyukayev said at a conference in Moscow today. The central bank has said it expanded the corridor twice last month, as part of its strategy to allow the ruble to float freely by 2012, Ulyukayev said at the time.
News of an adjusted trading band is positive for the ruble as it indicates the central bank’s “commitment to greater exchange-rate flexibility,” said Lissovolik. “It’s positive that they’re choosing to expand the corridor without undue pressure, without the ruble really reaching the upper end of the band,” he said.
The corridor was 32.95 to 36.95 per basket before today’s announcement, according to Nordea Bank AS. That would make the weak end of the band 37 after today. Bank Rossii refuses to reveal or confirm the parameters of the basket corridor.
The ruble slipped 0.5 percent against the dollar in November and gained 1.4 percent versus the euro.
Russian companies seeking out dollars to repay more than $17 billion of foreign debt due in December and to fund acquisitions outside the country are also fueling ruble depreciation, according to Lissovolik. Net capital outflows from Russia will reach $22 billion this year, the central bank said in monetary policy guidelines published Nov. 16.
Bank Rossii sent letters to Russian banks asking them to provide information on all foreign-exchange transactions as it seeks to root out the cause of the capital outflow, Kommersant reported, citing a copy of the correspondence. Debt redemption is driving outflows, Ulyukayev said today, declining to comment on the letter. This would be the second time this year Bank Rossii has inquired about banks’ currency trading, the newspaper reported.
Options traders are more bearish on the ruble, with the currency’s one-week risk reversal rate -- the premium of put options over calls -- more than doubling to 1.25 percent, the biggest increase among European emerging markets, according to data compiled by Bloomberg. Non-deliverable forwards, known as NDFs, which provide a guide to expectations of currency movements and interest-rate differentials, show the ruble at 31.2913 in three months, from 31.5629 yesterday.
Russia’s dollar bonds due 2020 rose for a second day, pushing the yield down 3 basis points to 4.7 percent.
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