Ruble Rallies to Strongest Level Since China's Yuan Devaluationby and
Norilsk Nickel drops on concern dividend payment to be delayed
Emerging-market currencies gain as Fed rate bets pushed back
The ruble rose to its highest level since Aug. 11 and equities jumped as a rally in crude oil, the nation’s main export, bolstered investor appetite for assets in the world’s biggest energy exporter.
The second day’s advance helped extend the currency’s recovery from this year’s low on Aug. 24 as oil prices recovered from a plunge triggered by China’s unexpected devaluation of the yuan. The ruble is also gaining as traders pare bets for an interest-rate increase in the U.S. this month.
The ruble jumped the most among developing-nation currencies on Monday as worse-than-estimated jobs data in the U.S. fueled speculation that the Federal Reserve will delay the liftoff until March. Russian assets were further buoyed by data that signaled an uptick in manufacturing as well as the biggest advance in crude oil since Sept. 21. Russia relies on oil and gas for about half of its budget earnings.
“Oil is definitely the main factor,” Yury Tulinov, head of research at Rosbank PJSC in Moscow, said by e-mail. “At the same time, we’re seeing a global rally on revised expectations regarding the timing of the Fed rate hike. There’s a positive trend and we’ll be seeing its effect over the upcoming weeks."
The ruble strengthened 1.7 percent to 63.693 per dollar as of 8:53 p.m. in Moscow, extending Monday’s 2 percent rally. The currency has Brent crude climbed for the third day, adding 3.9 percent to $51.16 a barrel. The price of crude in rubles rose to the highest level since Sept. 11. The currency has rallied almost 12 percent since Aug. 24.
Russia’s five-year ruble notes gained, dropping the yield 35 basis points to 10.77 percent. An inflation report on Monday showed price growth slowed unexpectedly for the first time since June last month, fueling bets the central bank has room to resume a series of interest-rate reductions. Russia’s Finance Ministry will offer 17.8 billion rubles in two OFZ bond auctions on Wednesday, according to a website statement.
The Micex Index of stocks climbed 1.1 percent, led by oil producers Lukoil PJSC and Rosneft OJSC. Oil shares declined last week after Economy Minister Alexei Ulyukayev said the government is close to canceling a planned cut in oil-export duty next year, which will save about 200 billion rubles ($3 billion). While the Finance Ministry dropped plans to raise about 600 billion rubles next year by increasing an oil-extraction tax, other measures are still on the table.
GMK Norilsk Nickel PJSC dropped 0.3 percent. Russia’s largest mining company may delay some dividend payments next year if prices for the nickel it produces remain weak, according to Deutsche Bank AG and BCS Financial Group.