Ruble Gains First Day in Three as Oil Heads for Four-Month High

The ruble gained for the first time in three days against the central bank’s dollar-euro basket as oil, Russia’s chief export, headed for its highest level in more than four months.

The currency appreciated 0.3 percent against the target basket to 34.7715 by 7 p.m. in Moscow, weaker than the 34.65 level at which traders say the central bank intervenes to curb gains that can be detrimental to export competitiveness. It added 0.4 percent to 30.0595 versus the dollar and 0.1 percent to 40.5305 relative to the euro.

Crude oil rose 0.6 percent in New York trading to $97.05 per barrel, its highest level on a closing basis since Sept. 14. Home prices in 20 U.S. cities climbed by the most in more than six years, signaling the country’s economic rebound is gaining traction. Deputy Finance Minister Sergei Storchak said in Davos last week that settlement through Euroclear may become available by Jan. 30.

Investors should buy the ruble and Russia’s local currency bonds as the country moves toward direct local debt settlement through Euroclear Bank SA and Clearstream International SA, Simon Quijano-Evans, an analyst at ING Groep NV, wrote in an e-mailed note today. Russia will “still able to benefit from a jump in flows as Euroclear and Clearstream enters into force,” he said.

Euroclear Hostage

Yields on Russian government ruble notes advanced as some investors took profit before Euroclear is introduced. The rate on notes, known as OFZs, maturing in February 2027 rose two basis points, or 0.02 percentage point, to 6.98 percent.

“Some people who bought bonds in November and December may be taking profits,” Dmitry Trenin, the chief trader at Otkritie Financial Corp., said by phone from Moscow.

The Finance Ministry will offer 20 billions rubles ($665 million) of OFZs maturing in January 2023 at 6.70 percent to 6.75 percent, according to guidance released today. The bonds yielded 6.75 percent today. The ministry will also offer 7.3 billion rubles of debt due February 2019 at a 6.27 percent to 6.32 percent yield. It traded at 6.34 percent.

“The domestic debt market remains a hostage to the Euroclear decision,” Sberbank CIB analysts said in an e-mailed note. The analysts still expect settlement to start in the first 10 days of February.

Bank Rossii bought 4.62 billion rubles of foreign currency on Jan. 24 and Jan. 25 to curb the ruble’s gain, according to central bank data. That is in addition to about 15.3 billion rubles it spent at the start of the year, the data show. Ruble futures for March settlement showed the Russian currency at 30.37 per dollar.

“We don’t expect drastic changes in the ruble rate,” Anna Bogdyukevich, an analyst at Aton Capital, said by phone from Moscow. “We see the level around 30 rubles” to the dollar in the near future, Bogdyukevich said.