Ruble Drops as Shrinking Trade Surplus Trumps Bank Rossii Buying

The ruble weakened the most in five days as concern over Russia’s shrinking trade surplus outweighed the biggest foreign currency sales by Bank Rossii in a year.

The ruble dropped 0.8 percent against the central bank’s dollar-euro basket to 37.2372 by 6 p.m. in Moscow, the lowest since June 4 last year. The Russian central bank, which reports intervention data with a lag, bought rubles on the market equivalent to about $200 million on June 7, the most in a year, according to a website statement today. That compares with purchases equal to about $89 million the previous day.

Global bond markets are undergoing a “bumpy adjustment” as investors shift funds from emerging markets amid rising yields on U.S. Treasuries, Vladimir Kolychev, head of research at OAO Rosbank, said in e-mailed comments. Russia’s trade surplus shrank 21 percent in April to $14.2 billion as exports declined 2.3 percent compared with a year earlier and imports rose 10.3 percent, the central bank said yesterday.

“Сontinued deterioration of the trade surplus is the key fundamental factor behind intensified weakness of the ruble,” Vladimir Osakovskiy, chief economist at Bank of America Corp. in Russia, said by e-mail. “In the absence of any major reflation in oil prices, we expect this trend to continue to provide pressure on the ruble in the remainder of the year.”

Global Retreat

Stocks, bonds and commodities fell around the world after Japan’s central bank left its stimulus efforts unchanged, stoking speculation regulators will fail to keep the global recovery on track.

Russia’s central bank increases its daily interventions to $200 million from $70 million to slow the ruble’s declines when the exchange rate weakens beyond 36.65 versus the basket, BCS Financial Group analysts Leonid Ignatiev and Dmitry Dorofeev said in an e-mailed note.

Brent crude fell 1.9 percent to $102.01 per barrel, extending a 0.6 percent decline on June 10. The oil and natural-gas industries contribute about half of Russia’s budget revenue.

The currency depreciated 0.5 percent versus the dollar to 32.4600 with three-month volatility rising to 10.935, 26 basis points below the highest level since October.

The yield on the government’s benchmark OFZ ruble bonds due 2027 rose 12 basis points, or 0.12 percentage point, to 7.87 percent, the highest since October.

Outflows from Russia-dedicated bond funds accelerated to $93 million in the week to June 5 from $24 million, OAO Gazprombank said on June 7, citing EPFR Global data. Net outflow from emerging-markets bond funds, where Russia’s weight is about 10 percent, totaled $1.65 billion in the week to June 5.

“OFZs are clearly not an exception,” Kolychev said.

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