Ruble Weakens Against Basket for Second Week as Yields Increase

The ruble declined, extending a second weekly retreat, and Russian bonds fell as speculation grew an improving U.S. economy will prompt the Federal Reserve to cut stimulus that’s fueled flows to emerging markets.

The ruble depreciated 0.1 percent to 37.8885 against the dollar-euro basket by 2:30 p.m. in Moscow, bringing the weekly drop to 0.6 percent. The Russian currency weakened for an eighth day against the greenback.

The U.S. jobless rate probably declined last month, economists said before a Labor Department report today. Data yesterday showed American jobless claims fell to a five-year low and manufacturing expanded at the fastest pace in two years. India’s rupee and the South African rand have led declines among 22 of 24 emerging-market currencies tracked by Bloomberg over the past five days.

“It’s a stronger dollar rather than a weaker ruble,” Vladimir Miklashevsky, a trading desk analyst from Danske Bank S/A in Helsinki, said by e-mail. There’s been “a flow of positive news from the States,” he said.

The yield on benchmark OFZ bonds due February 2027 increased eight basis points, or 0.08 percentage point, to 7.87 percent.

Jobs Report

U.S. Labor Department releases employment data for July at 4:30 p.m. Moscow time today. U.S. employers added 185,000 jobs in July, following a 195,000 gain in June, according to the median forecast of economists in a Bloomberg News survey before the Labor Department’s figures today.

The ruble depreciated 0.2 percent against the euro to 43.7395, taking the weekly decline to 0.4 percent. European Central Bank President Mario Draghi said the euro region is past the worst of its longest recession and reiterated that interest rates will stay low for the foreseeable future.

“The euro is also rising on the back of yesterday’s Draghi comments,” Miklashevsky added.

The Russian central bank, which reports foreign-exchange interventions with a lag, spent the equivalent of 8.12 billion rubles ($245 million) in foreign currency on July 31 buying rubles, compared with about $200 million daily since July 8.

Bank Rossii sells $200 million a day as long as the exchange rate is within the range of 36.85-37.85 ruble per basket and may increase the volume of daily interventions to $300 million to $400 million, Alexander Kudrin, head of fixed-income research at Sberbank CIB, said in an e-mailed note.

Targeted Selling

According to the central bank data, about three fourths of daily intervention volumes are targeted selling, and the rest is the so-called non-target interventions, conducted in order to smooth out excessive ruble volatility. As soon as the volume of non-targeted interventions reaches $450 million, the central bank moves the currency corridor by 5 kopeks. In July, it moved it three times to current 31.85-38.85, according to a statement on the Bank Rossii website.

In light of large dividend payments in August, partially converted into foreign currency in order to be transferred to overseas holders of depositary receipts, “demand for forex will persist,” according to Sberbank’s Kudrin.

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