Ruble Advances Third Day on Exporter Tax Payments; Yields Drop

The ruble strengthened for a third day as exporters bought the Russian currency to pay taxes. Bonds gained for a second day.

The ruble advanced less than 0.1 percent to 38.0243 against the central bank’s euro-dollar basket by 6 p.m. in Moscow, after appreciating to 37.9321 earlier. The yield on the government’s ruble debt due February 2027 declined four basis points, or 0.04 percentage point, to 7.92 percent.

Russian companies paid about $8 billion to 9 billion in excise duties and mineral extraction tax for July today, with nearly half of this sum going through the market, according to Igor Akinshin, a foreign-exchange trader at OAO Alfa Bank in Moscow.

“The main movement come from corporates paying taxes,” Akinshin said by phone. “But it didn’t go deeper, as dividends are expected this week, and it’s keeping a lid on the ruble.”

Companies including natural gas export monopoly OAO Gazprom may buy about $2 billion to pay dividends to holders of depositary receipts this week, according to Dmitry Dorofeev, a BCS Financial Group analyst.

Gazprom Dividend

The Russian central bank sold 13.26 billion rubles of foreign currency on Aug. 22, bringing the total amount spent since May 29 to almost 406 billion rubles ($12.3 billion).

The ruble was little changed against the dollar at 33.0005 and against the euro at 44.1650. Brent oil declined 0.3 percent to $110.71 per barrel after rising to the highest since February 20 on Friday.

This week may be “trend-setting” for the ruble in the short term, Maxim Korovin and Anton Nikitin, analysts at VTB Capital in Moscow, said in an e-mailed note. While the ruble is weakened by companies converting rubles into foreign currency for dividend payments, the “fundamentals, namely oil, are supportive,” they said.

The last tax payment in this month falls on Aug, 28, when the companies pay corporate income tax. They may spend $2 billion buying rubles, Akinshin from Alfa Bank said.

Before it's here, it's on the Bloomberg Terminal.