Ruble Breaches Bank Rossii Target, Yields Fall on Tax, Euroclear

The ruble gained, breaching the level traders say may trigger central bank interventions for the first time in two weeks as oil rose and companies paid taxes. Bond yields fell on bets the local market may open to foreigners this month.

The ruble strengthened for a fourth day, adding 0.1 percent versus Bank Rossii’s dollar-euro target basket to 34.6365 by 7 p.m. in Moscow. The central bank weighs interventions to curb gains at 34.65 against the measure, Artem Roschin, a currency trader at Aljba Alliance Bank, said. Yields on 2022 ruble debt fell the most in two weeks.

Companies are due to pay about 250 billion rubles ($8 billion) in mineral extraction taxes tomorrow, according to VTB Capital. Russia’s next ruble bond auction in January may be held through Euroclear Bank SA for the first time, Deputy Finance Minister Sergei Storchak said in Davos, Switzerland yesterday. Oil, Russia’s main export, climbed as much as 1.2 percent as U.S. jobless claims fell to a five-year low.

“The central bank won’t act until we’re firmly in its purchase territory,” Roschin said by phone from Moscow. “But I’m starting to think of going long on the basket.”

The ruble added 0.2 percent to 30.1050 against the dollar, the strongest level since May 5 and was little changed against the euro. The yield on so-called OFZs due July 2022 fell eight basis points to 6.66 percent. The yield on ruble notes maturing February 2027 fell three basis points to 6.99 percent after increasing four basis points in the previous three days.

FX Interventions

Oil rose after claims for jobless benefits in the U.S. unexpectedly dropped last week to a five-year low, while the Conference Board’s index of leading indicators rose in December by the most in three months in a sign the world’s largest economy is poised to keep growing.

“We see further ruble appreciation possible on improvement in global risk appetite,” Sergey Romanchuk, head of forex and money markets at OAO AKB Metallinvest Bank in Moscow, said by phone. “It’s possible we will see attempts to push through the 30-ruble level” versus the dollar, he said.

The last time ruble closed stronger than 34.65 against the basket was Jan. 10, prompting the central bank buy about 15.3 billion rubles of foreign exchange to weaken the currency.

The median forecast for the ruble against the basket for the first quarter is 34.60, according to analysts surveyed by Bloomberg.

Ruble debt rallied after Storchak said it is “quite possible” the Finance Ministry’s next OFZ auction in January will be held with direct settlement through Euroclear. Russia is preparing to allow foreign investors -- who currently deal through local brokerages -- direct access to the domestic market, a move Sberbank Investment Research says may bring $20 billion of inflows this year.

Liquidity Up

“We see demand for OFZs today, both due to Euroclear and internal factors,” Dmitry Igumnov, head of fixed income trading at BCS Financial Group, said by e-mail. “Liquidity is up and, as a consequence, money market rates are down.”

Russia’s overnight MosPrime rate fell 32 basis points to 5.16 percent, the lowest since September.

The excess liquidity is due to the Treasury’s decision to roll over 160 billion rubles in maturing deposits to next week as well as an unexpected inflow of budget funds, VTB analysts Maxim Korovin and Anton Nikitin wrote in a research note. Overnight borrowing rates may stay at 5.5 percent until mid-February, they said.

“The outlook for liquidity in the coming weeks has changed.”

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