Ruble Retreats Versus Basket as Oil Drops, Tax Period Winds Down

The ruble weakened as crude oil prices declined and the tax period wound down, curbing demand for the local currency from exporters.

The ruble depreciated 0.4 percent against Bank Rossii’s target basket of dollars and euros to 35.5320 by 6 p.m. in Moscow, paring its gain in the week to 1.4 percent. It fell 0.4 percent versus the dollar to 31.2950.

Crude slid 0.3 percent in London to $103.10 per barrel. Oil and natural gas contribute about 50 percent of Russia’s budget revenue. The last tax payments this month are due April 29.

“As the tax period ends, the ruble has no chance for growth next week,” Anton Zakharov, an analyst at OAO Promsvyazbank, said by e-mail.

Today’s decline pushed the ruble closer toward 35.65 to the basket, the level at which the central bank may intervene to support the currency. Bank Rossii said it spent the equivalent of 2.22 billion rubles selling foreign currency and buying rubles on the market on April 24. The bank intervened daily from April 15, selling the equivalent of about 2.2 billion rubles of foreign currency per day.

“I’m negative on the ruble,” Andrei Mishko, foreign exchange trader at MDM Bank, said by phone from Moscow. “What we’ve seen this week is just a correction before the leg down.”

Mishko recommends buying the basket when it weakens against the ruble on bets that it will strengthen to 36 rubles, Mishko added.

The Russian currency should trade at 36 rubles to the basket when Brent is at $100 per barrel, BCS Financial Group analysts Leonid Ignatiev and Dmitry Dorofeev said in an e-mailed report.