Ruble Strengthens With Bonds on Oil Rebound, U.S.Economic DataVladimir Kuznetsov
The ruble, the most-volatile currency in emerging markets, strengthened along with global peers as Brent rebounded and disappointing U.S. economic data boosted speculation the Federal Reserve won’t rush to raise interest rates.
Russia’s currency gained 0.2 percent to 36.093 per dollar as of 6 p.m. in Moscow, after earlier dropping as much as 0.3 percent. Brent gained 0.3 percent to $103.31 per barrel after falling to its lowest intraday level in 13 months. Oil and natural gas comprise 50 percent of Russia’s budget revenue.
Currencies from the ruble to South Africa’s rand gained after a report showed U.S. retail sales were little changed in July, suggesting the recovery is failing to gain traction. The Fed cut monthly bond purchases by $10 billion for a sixth consecutive meeting last month to $25 billion as it considered when to raise its record low lending rate for the first time since 2006.
“The ruble turned round with other emerging-market currencies and the euro against the dollar,” Maxim Korovin, an analyst at VTB Capital in Moscow, said by phone. “It was a global trend.”
The yield on 10-year Russian government bonds fell four basis points to 9.4 percent, taking this month’s decrease to 10 basis points. The Micex gauge of equities climbed 1.8 percent in its fourth day of gains, the longest rally in two months.
One-month historical price swings in the ruble are the highest among 24 developing countries at 10.52 percent, according to data compiled by Bloomberg. Volatility has climbed 49 basis points this week as Russia sent a 280-truck convoy toward the Ukrainian border.
Ukrainian officials said today they’d refuse entry to the convoy amid speculation that Russia intends to use the mission to start a military invasion.
The ruble gained less than 0.1 percent to 48.3325 per euro and added 0.1 percent versus the central bank’s target basket of dollars and euros to 41.7498.
“Short-term volatility is rising as the situation around the convoy and the conflict in Ukraine in general remains highly uncertain,” Vladimir Miklashevsky, a strategist at Danske Bank A/S in Helsinki, said by e-mail.
Analysts surveyed by Bloomberg have reduced their outlook for the ruble as the Ukraine crisis escalated. The currency will weaken to 36.30 per dollar by year-end, according to the median estimate of 41 contributors to the survey.
Russia’s central bank has a threshold of 42.45 rubles against the basket at which it would start intervening to slow the currency’s decline. It buys $200 million of rubles per day when that level is breached.