Ruble Exits Intervention Zone, Snaps 4 Days of Gains to Basket

The ruble fell for the first time in five days against the central bank’s dollar-euro basket as the currency moved out of the zone traders say Bank Rossii targets to curb gains. Bond yields fell.

The ruble lost 0.3 percent to 34.7209 against the basket, seven kopeks weaker than the 34.65 level at which the regulator may intervene, according to Ruslan Tongiev, head of financial markets operations at OAO Promsvyazbank. The currency pared a 0.3 percent advance versus the dollar to trade up 0.1 percent at 30.0500 by 7 p.m. in Moscow for a 0.7 percent week gain. Ruble notes rose as economic data stoked rate-cut bets.

The ruble surpassed 30 rubles to the dollar for the first time since May 5 today as crude oil, Russia’s main export, headed for its longest run of weekly increases since 2009 on signs of global economic growth. Investment decreased the most in 23 months in December as a dimming economic outlook prompted businesses to cut spending, data showed.

The prospect of 29.5 or 29 rubles to the dollar is “illusory” and the central bank will slow the ruble’s appreciation to the end of the month, Promsvyazbank’s Tongiev said by phone today.

Bank Rossii is due to publish data Jan. 28 that will show whether it intervened on Jan. 24, when the ruble broke through the level of 34.65 against basket for the first time in two weeks. The ruble was 0.6 percent weaker against the euro at 40.4480.

“It looks as though the bulletproof resistance level” of 30.20 to the dollar has “surrendered” and “30 might prove to be even stronger,” VTB Capital analysts Maxim Korovin and Anton Nikitin wrote in an e-mailed note.

Debt Rally

The yield on so-called OFZs due July 2022 fell for a third day, declining five basis points to 6.61 percent, the lowest level since January 10. The yield has dropped 11 basis points, or 0.11 percentage point, this week.

Fixed-capital investment slid 0.7 percent in December, the biggest decline since January 2011, the Federal Statistics Service in Moscow said in a report today.

The data are “negative news for the ruble, but supportive for OFZs” because they may prompt Bank Rossii to lower interest rates, Vladimir Osakovskiy, chief economist for Bank of America Corp in Moscow, wrote by e-mail.

The government’s next ruble-bond auction in January may be held for the first time through Euroclear Bank SA, Deputy Finance Minister Sergei Storchak said in an interview in Davos, Switzerland this week. Russia has been preparing to give foreign investors direct access to the domestic market instead of dealing through local brokerages.

With foreign access, overseas holdings of OFZs will surge fourfold from $11.5 billion this year $48.5 billion in 2015, Gintaras Shlizhyus, an analyst with Raiffeisen Bank International AG, wrote in an e-mailed note today.