Ruble Ends Three-Day Gain After Rising to Highest in Five Months

Russia’s ruble ended a three-day advance that took it past 50 versus the dollar for the first time since November as some technical indicators showed the currency is overbought.

The ruble fell 0.8 percent to 50.1080 against the dollar at 6:51 p.m. in Moscow. It has gained 21 percent this year, the best performance in the world, pushing its 14-day relative strength index above 70 for a fourth day, a signal to some analysts that a security is set for a reversal.

After sliding 46 percent in 2014 amid a slump in the price of crude and sanctions over Moscow’s support for Ukrainian separatists, the ruble has recovered this year as oil stabilized and a cease-fire in eastern Ukraine holds. The rebound has allowed the central bank to lower borrowing costs, sending yields on government debt tumbling and bringing the Finance Ministry back to regular bond sales.

“The ruble clearly strengthened too quickly,” Alexei Egorov, an analyst at PAO Promsvyazbank in Moscow, said by phone. “Since the oil price remains at comfortable levels and everyone wants to ride the ruble carry trade, it may be too early to talk about a reversal.”

Russia on Wednesday sold the most debt since October 2013 as the ruble’s gains spurred bets inflation will slow and the central bank will keep cutting interest rates. The key rate was lowered to 14 percent in March after an emergency increase to 17 percent in December to arrest the ruble’s slump to 80.1 against the dollar. The last time the ruble traded at 50 was on Nov. 28.

Putin Phone-In

The dollar-denominated RTS Index of shares climbed 0.9 percent on Thursday, extending this year’s advance to 34 percent, the most globally after Argentina and Venezuela. The Micex Index of shares gained 0.5 percent with OAO Novatek rising 2.6 percent and OAO Lukoil declining 0.6 percent.

“We see the ruble strengthening and stock markets rising,” President Vladimir Putin said in a televised call-in show Thursday, while noting that Russia is living through “difficult economic conditions.”

The Russian economy will contract by 4.1 percent this year, according to the median of 44 estimates compiled by Bloomberg. Gross domestic product shrank 1.9 percent in the first two months of 2015 from a year earlier. GDP rose 0.6 percent in 2014, the slowest pace since a contraction in 2009. That compares with growth that averaged about 7 percent during Putin’s first two terms as president in 2000-2008.

S&P, Fitch

Five-year bonds gained, cutting the yield two basis points to 10.8 percent. Russia’s five-year credit-default swaps fell six basis points to 341 basis points, according to data compiled by Bloomberg.

Standard & Poor’s and Fitch Ratings, both of which downgraded Russia’s rating this year, are scheduled to publish the results of their latest reviews of the nation on Friday.

There is “some possibility” Fitch will bring its investment-grade rating in line with Moody’s and S&P, both of which downgraded the sovereign to junk this year, London-based HSBC Holdings Plc analyst Reza-ul Karim wrote in a note to clients on Wednesday.

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