Ruble Erases Advance Against Bank Rossii Basket as Oil DeclinesVladimir Kuznetsov
The ruble erased gains against the central bank’s target basket as oil dropped and investors bet the currency will weaken further.
The ruble declined less than 0.1 percent against Bank Rossii’s dollar-euro basket to 35.4448 after strengthening to as high as 35.3084, a 1.9 percent gain from an intra-day low on April 5. The ruble gained 0.2 percent against the dollar to 31.1550 by 7 p.m. in Moscow.
Brent crude fell 0.1 percent in London trading to $104.60 per barrel. Oil and gas account for about 50 percent of Russia’s budget revenue. Many market participants decided 35.40 rubles was a “good level” to start building new positions, Igor Akinshin, trader at Alfa Bank, said by phone from Moscow.
“Generally, the line is still for the rate cutting and the ruble weakening,” Akinshin said.
The central bank will cut its refinancing rate by 25 basis points, or 0.25 percentage point, in the second quarter, according to the median forecast of 13 economists surveyed by Bloomberg.
Russia’s lower house of parliament today approved President Vladimir Putin’s choice of aide Elvira Nabiullina as the next central bank chairman when Sergey Ignatiev steps down in June.
Bank Rossii sold 2.21 billion rubles ($71 million) of foreign exchange on April 5, it said on its website today. This is “another factor” supporting bets on the ruble’s weakening, according to Alfa Bank’s Akinshin.
“The central bank virtually confirmed it’s not aggressive in defending the ruble,” he said.
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