Ruble Rises 2nd Day Before Tax Payments as Russian Stocks Gain

The ruble strengthened for a second day amid speculation exporters were buying the currency before tax payments and as Russia prepared to sell debt.

The ruble strengthened 0.6 percent versus the dollar, extending its gain in the past month to 2.5 percent, the best performance among its peers. The government’s February 2027 bond fell for a third day as the Finance Ministry said it planned to auction 15 billion rubles ($242 million) of bonds this week. The RTS index of stocks rose for the first time in three days.

Russian companies will pay about 1.3 trillion rubles in taxes this month, with the heftiest payments due March 25, according to a survey of five economists conducted by Bloomberg. Exporters selling foreign-currency revenue are supporting the currency, which has depreciated 41 percent in the past year amid declining oil prices and the conflict in Ukraine, according to OAO Alfa Bank and Sberbank CIB.

“The key priority for the Russian currency market at the moment is tax payments,” Igor Akinshin, a foreign-exchange trader at Alfa Bank in Moscow, said by e-mail. “The biggest payments and key ruble movements are ahead of us.”

The currency appreciated to 61.7980 against the greenback as of 4:25 p.m. in Moscow after sliding 1.7 percent on Friday following the central bank’s decision to lower borrowing costs.

Russia’s Finance Ministry said it will offer 5 billion ruble of floating-rate bonds due January 2025 and 10 billion rubles of fixed-rate bonds due May 2020. It has sold about 80 billion rubles in bonds since the beginning of the year, or more than double the amount for the same period in 2014.

Economic Woes

Even after this month’s gains, the ruble has lagged its 23 emerging-market peers in the past year as sanctions imposed on Russia by the European Union and the U.S. weighed on an economy already reeling from lower oil prices.

Crude, Russia’s main export earner, fell 0.9 percent to $52.97 in London, leaving its down 50 percent in the past year.

German Chancellor Angela Merkel said on Monday that the EU would consider imposing further sanctions on Russia at a summit this week if there’s a major violation of a cease-fire in eastern Ukraine, which has been in place since mid-February.

Emerging-market currencies gained for a second day as U.S. economic reports from housing starts to consumer confidence trailed estimates, fueling bets the Federal Reserve won’t rush to increase interest rates. The Fed announces its policy decision on Wednesday.

The ruble “could see a larger movement next week on tax payments,” Iskander Abdullaev, an analyst at Sberbank CIB, said by e-mail. “Investors are prepared to push the ruble higher.”

The currency will rise to 57 by the end of March if Brent prices remain stable, Abdullaev said, implying an appreciation of more than 8 percent from current levels.

The dollar-denominated RTS Index added 0.6 percent to 817.94 on Tuesday, the first advance in three days. The Micex Index was little changed.

OAO Alrosa, Russia’s biggest diamond producer, gained 3.6 percent. The stock was included in the Market Vectors Russia Index with a weighting of 1.9 percent, which could trigger $33 million of inflows into the corresponding exchange-traded fund, VTB Capital analyst Ilya Piterskiy said in an e-mailed note on Monday. The index slipped 0.8 percent today.

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