Ruble Falls for Third Day Against Basket as Oil Sinks on China

The ruble weakened for a third day as oil fell to the lowest level this year after economic growth slowed more than expected in China. The yield on the government’s 2027 bond increased the most since December.

The ruble fell 0.9 percent against the central bank’s dollar-euro basket to 35.7074, weaker than the level at which traders say the central bank intervenes to bolster the Russian currency. The ruble declined 0.9 percent against the dollar to 31.3530 by 7 p.m. in Moscow.

Crude, Russia’s chief export earner, lost 2.9 percent in London trading, falling to $100.15 per barrel, the lowest level since July. Commodities retreated after China, the world’s second-largest crude consumer, said gross domestic product rose 7.7 percent in the first quarter, the National Bureau of Statistics said in Beijing. That compares with an 8 percent median forecast of analysts surveyed by Bloomberg.

“The fall is undoubtedly due to the decline in oil prices,” Anton Zakharov, a senior commodities and currency analyst at OAO Promsvyazbank, said by phone from Moscow. “From these levels the central bank starts forex interventions.”

When the ruble weakens below 35.65 per basket, Bank Rossii intervenes, selling the equivalent of $70 million in foreign currency and purchasing rubles, Morgan Stanley said in a research note published April 11. The central Bank reported 2.1 billion rubles in interventions on April 5 and 2.2 billion rubles on April 8.

Yields Rise

The yield on the OFZ due February 2027 rose 12 basis points, the most since Dec. 5, to 7.19 percent, according to data compiled by Bloomberg.

The Finance Ministry trimmed the amount and duration of OFZ bonds to be offered at an auction of securities on April 17. The government plans to sell 20 billion rubles of OFZs due 2023 and 10 billion rubles due 2018, according to a statement on the ministry’s website. Last week the ministry sold all 35 billion rubles of bonds due 2028 and 2019.

While the monthly tax period started today in Russia with obligatory transfers to insurance and pension funds, “significant” currency sales by exporters probably won’t happen before April 25, when Russian companies pay the mineral extraction tax, Maxim Korovin and Anton Nikitin, analysts at VTB Capital in Moscow, said in a note to clients.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE