Ruble Strengthens for Second Day to Dollar on Crude Oil, Rates

The ruble rose for a second day against the dollar, earlier touching the strongest level since May, as oil climbed to a four-month high and the government signaled the central bank is resisting an interest rate cut.

Russia’s currency climbed 0.1 percent to 30.2250 per dollar by 11:50 p.m. in Moscow, after reaching 30.1650, the highest level since May 11. The ruble strengthened 0.2 percent to 40.2150 against the euro and increased 0.2 percent against Bank Rossii’s target dollar-euro basket to 34.7205.

Crude oil, Russia’s biggest export, gained 0.7 percent in New York to $96.24 per barrel. Bank Rossii is resisting the government’s calls to cut interest rates, First Deputy Prime Minister Igor Shuvalov said in a Jan. 18 interview. Russia’s central bank left borrowing costs unchanged this month after unexpectedly raising rates in September.

“Ruble appreciation is logical and justified given the level of the oil prices and the relatively high domestic interest rates,” Denis Korshilov, head of fixed income, currencies and commodities of Citigroup Inc. in Moscow, said by phone.

The yield on Russia’s ruble bond due February 2027 rose one basis point to 7.02 percent after the Finance Ministry announced the guidance for tomorrow’s placement of two ruble-denominated issues totaling 50 billion rubles ($1.7 billion).

The Ministry plans to sell 35 billion of bonds maturing in December 2019 and 15 billion rubles of notes due January 2028. Yield guidance is 6.47 percent to 6.52 percent on the first issue and 7 percent to 7.1 percent on the second.

The yield guidance for the longer bond was higher than expected, according to Luis Costa, emerging markets strategist at Citigroup Inc. in London.

“Secondary trading might respond to that adjusting yields slightly up,” he said by e-mail.

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