Ruble Trims Best Week Gain in Emerging Markets as Taxes Ease

The ruble fell for the first time in five days, paring the best gain among emerging markets this week as tax payments wound down and some investors speculated the Russian currency’s gains were overdone.

The ruble weakened 0.1 percent to 39.2377 against the central bank’s dollar-euro basket by 6 p.m. in Moscow when the regulator ends its market operations, leaving it 2.1 percent stronger in the week. The exchange rate was little changed against the dollar at 33.7340.

Monthly taxes boosted demand for the ruble this week and investors speculated the crisis in Ukraine is de-escalating after President Vladimir Putin asked lawmakers to rescind authorization they gave March 1 to use force to protect native Russians in the neighboring country. The currency’s 14-day relative strength index versus the basket was at 30.6 yesterday, the lowest level in a month and close to the threshold of 30 that indicates to some analysts that an asset is poised to reverse.

“The ruble strengthened all week and got to an important technical level,” Aram Kazaryan, a foreign-exchange trader in Moscow at OAO MDM Bank, said by e-mail. “Exporters stopped converting their hard currency earnings to pay tax.”

Government local-currency bonds due August 2027 dropped, raising the yield two basis points to 8.48 percent, trimming this week’s decline to 14 basis points. The Finance Ministry sold all 10 billion rubles ($296 million) of OFZ bonds due August 2023 at an auction June 25, its first sellout in a month.

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