Ruble Gains, Micex Surges to 3-Week High as Ukraine Woes WaneKsenia Galouchko and Vladimir Kuznetsov
The ruble strengthened for a fourth day and Russian stocks advanced to the highest level in three weeks amid signs that the crisis in Ukraine may be easing.
The ruble added 0.4 percent to 41.5050 against the central bank’s dollar-euro target basket by 6 p.m. in Moscow, the strongest level on a closing basis since Feb. 24. The Micex Index climbed 1.9 percent to 1,349.39, the highest since March 5 by the close. OAO Gazprom, the nation’s biggest natural gas producer, jumped 4 percent to 133 rubles.
Russian markets are returning to levels seen before President Vladimir Putin’s decision to annex Ukraine’s Crimea region sparked the worst standoff between Russia and the U.S. since the Cold War. The country’s equities trade at the cheapest valuations among 21 developing countries monitored by Bloomberg.
“Investors’ fear of an escalation of the Ukraine crisis is going away,” Oleg Shagov, head of equity research at OAO Promsvyazbank, said by phone from Moscow. “The risks of starker sanctions have come down.”
U.S. President Barack Obama is scheduled to speak today on what the standoff with Russia over Ukraine means for European security. The U.S. and the European Union imposed sanctions on Russian officials and threatened more if Putin fails to ease the crisis.
“The ruble is the main driver for the equities growth as the geopolitical situation is stabilizing,” Alexei Bolshakov, head of Russia equities at ZAO Citigroup Global Markets in Moscow, said by e-mail today.
Daily equity trading volumes at OAO Moscow Exchange surged to a record 72 billion rubles ($2 billion) in the first three weeks of this month, compared with an average of 35 billion in February, the bourse said yesterday.
The tax schedule for Russian companies ends this week with payment of about 290 billion rubles of corporate income tax March 28, according to the median of three estimates compiled by Bloomberg.
The ruble rose 0.3 percent to 35.4545 against the dollar. The currency is 7.4 percent weaker this year, the second-worst performance among 24 emerging-market currencies monitored by Bloomberg after Argentine’s peso.
The ruble is trading within the zone where the central bank sells $200 million a day to smooth out excess volatility and may enter the band where the regulator doesn’t intervene for the first time this year if strengthens beyond 41.25 rubles per basket.
“The ruble is lifted by optimism on the lack of new sanctions from the U.S. and the EU,” Dmitry Dorofeev, a money manager at BCS Financial Group, said in e-mailed comments. “Generally the situation around Ukraine is calming down, forcing some investors to close short positions in the ruble.”
Investors pulled $5.5 billion from Russian equities and bonds this year through March 20, already approaching the total outflow of $6.1 billion for all of 2013, according to data compiled by EPFR Global, a Cambridge, Massachusetts-based company that tracks fund flows.
The dollar-denominated RTS Index jumped 2.5 percent to 1,198.89, the highest since Feb. 28, today.
“The RTS could get back to 1,300 during April, the pre-Ukraine sell-off level, if the ruble continues to strengthen, and especially if this week we find out emerging-market equity funds had the first week of inflows after many weeks of outflows,” Citi’s Bolshakov said.