Ruble Gains for Third Day Against Dollar as Crude Oil Advances

The ruble strengthened for a third day against the dollar as crude oil rallied, helping the world’s largest energy exporter sell out bond auctions.

The Russian currency appreciated 0.2 percent against the dollar to 32.9370 by 6 p.m. in Moscow, when the central bank stops its market transactions. It was little changed against Bank Rossii’s target basket of dollars and euros at 37.1295. The yield on benchmark OFZs due February 2027 increased eight basis points, or 0.08 percentage point, to 7.87 percent.

Brent oil gained 0.4 percent in London to $108.20 per barrel. Income from export of oil and gas contributes as much as 50 percent of the state budget’s revenue. The Finance Ministry issued 20 billion rubles of 10-year and five-year debt at auctions today.

“Support from the rising commodities prices is an important factor,” Dmitry Polevoy, an economist for Russia and Kazakhstan at ING Groep in Moscow, said in e-mailed note.

The Finance Ministry sold all 10 billion rubles of bonds due January 2023 with an average yield of 7.39 percent and 10 billion rubles of securities due January 2018 at 6.64 percent, the ministry said on its website.

“Local banks must have been proactively participating in the auctions,” Maxim Korovin, an analyst at VTB Capital in Moscow, said by e-mail. “The spread between the cost of refinancing with the central bank and the OFZ yield is back to normal, relative to its historical levels.”

Rate Decision

Bank Rossii will leave the refinancing rate at 8.25 percent when policy makers meet on July 12, according to the median forecast of economists surveyed by Bloomberg. The central bank may cut short-term rates by 25 basis points after inflation slowed in June to 6.9 percent from 7.4 percent the previous month, Morgan Stanley analysts said July 8. It will be the first meeting on interest rates since Elvira Nabiullina took over running the central bank.

U.S. Federal Reserve Chairman Ben S. Bernanke speaks today and the Federal Open Market Committee publishes minutes from its June meeting. Markets slid on June 20 after Bernanke’s comments that the Fed may wind down its bond buying if the economy performs in line with projections.

An index of emerging-market currencies compiled by Bloomberg rose 0.1 percent to 93.32 by 6:27 p.m. in Moscow. While the ruble is the sixth-best performer among 24 emerging currencies tracked by Bloomberg today against the dollar, it’s down about 8 percent this year.

“It’s too early to talk of a final turnaround in the ruble trend,” Polevoy said. “Fundamentally the ruble is weak.”

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