Ruble Snaps Seven Days of Declines Against Dollar as Taxes Loom

The ruble strengthened for the first time in eight days against the dollar as companies prepared to pay taxes and President Vladimir Putin said a free-floating currency will benefit the economy.

The ruble gained 0.1 percent to 33.8975 against the greenback at 6 p.m. in Moscow, when the central bank stops its trading operations. The yield on ruble-denominated OFZ bonds due February 2027 was unchanged at 8.1 percent.

Companies, including commodities exporters, are buying the local currency as they prepare to pay about 430 billion rubles ($13 billion) next week in duties such as the mineral-extraction tax, said Vladimir Miklashevsky, a strategist at Danske Bank A/S in Helsinki. The economy will be more effective with a free-floating currency, Putin told students in Moscow today. Bank Rossii plans to shift its policy regime to targeting inflation and make the ruble a free-floating currency next year.

“Corporations are starting to buy the ruble at current attractive levels before large taxes next week,” Miklashevsky said in e-mailed comments.

The government is not concerned with the “short-term fluctuations” of the national currency, which can be dealt with by the central bank’s liquidity management, Deputy Prime Minister Arkady Dvorkovich said in a Bloomberg TV interview at the World Economic Forum in Davos today. Putin said he had met with Bank Rossii Chairman Elvira Nabiullina yesterday and been informed that the regulator has no plans to devalue the ruble.

Oil Advances

Crude oil, Russia’s chief export earner, advanced for a second day in London, adding 0.7 percent to $107.51 per barrel. The ruble was little changed against Bank Rossii’s target basket of dollars and euros at 39.3518 and steady versus the euro at 46.0175.

The ruble halted its longest streak of losses against the dollar since Sept. 3, according to data compiled by Bloomberg, paring the the decline since the beginning of the year to 3.1 percent. That’s the fifth weakest performance among 24 emerging-markets currencies since the beginning of the year.

The currency is “more likely” to weaken than strengthen because of market conditions and changes in funds’ sentiment, Economy Minister Alexei Ulyukayev said in a Davos interview today.

The Finance Ministry sold 8.44 billion rubles of bonds out of 20 billion it offered at auctions today. The government placed 7.69 billion rubles of August 2023 securities and 750 million rubles of May 2019 notes, according to statements on the ministry’s website.

Some market participants are interpreting the comments from the president and other officials “as a sign they don’t plan to defend the ruble,” said Ivan Mironets, a foreign exchange trader at OAO Sberbank.

“On the other hand, the latest moves were highly speculative,” rather than fundamental with the ruble able to bounce back 30 to 50 kopeks in the next few few days if the trend reverses, he said by phone from Moscow.

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