Ruble Advances as Brent Crude Gains for First Time in Seven Days

The ruble strengthened against Bank Rossii’s target basket as an increase in the oil price helped the currency partly recover from its biggest retreat in almost nine months.

The ruble appreciated 0.5 percent against the dollar-euro basket to 36.0583 by 6 p.m. in Moscow, when the central bank stops participating in trading. It tumbled 1.4 percent against the basket yesterday, the steepest one-day decline since July 23. The yield on benchmark OFZ bonds due February 2027 fell eight basis points, or 0.08 percentage point, to 7.07 percent.

Brent oil snapped six days of losses, gaining as much as 1.7 percent to $99.34 per barrel, after Spain sold more than its maximum target at a bond auction and U.S. employment data matched economists’ expectations. Revenue from sales of crude oil and natural gas comprise about 50 percent of Russia’s state budget income.

The ruble’s advance is almost entirely because of the oil price movement, according to Alexander Myulberger, head of foreign exchange and interest rates trading at BCS Financial Group in Moscow.

The Russian currency advanced 0.6 percent today against the dollar to 31.6990 after sinking 2 percent yesterday. Trading in the dollar-ruble pair reached the highest in the last four years yesterday at $24.20 billion, the Moscow Exchange said in an e-mailed statement. Its 30-day volatility jumped to 9.9, the highest since October 26, according to data compiled by Bloomberg.

Tax Payments

The regular tax period in Russia continued today with excise tax payments. On the three biggest payment days, which start on April 22 with value-added tax, 450 billion rubles ($14 billion) must be transferred to the state budget, according to OAO Rosbank calculations published April 9.

“A week ago when the ruble was jumping against the dollar exporters sold everything, so i don’t think there’ll be a big flow from them during this window,” Myulberger said by phone from Moscow.

Bank Rossii sold the equivalent of 2.2 billion rubles in foreign currency on April 16 in addition to 1.6 billion on April 15, according to data on its website.

The central bank “will need to be far more heavy handed in order to curb ruble losses within the current environment,” Tradition UK analysts said in an e-mailed note.

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