Ruble Climbs as Danske Points to Russia for Best Wager on Crude

  • Morgan Stanley investor poll ranks ruble in top 3 among peers
  • Russian currency set for strongest 2-day gain since August

The ruble rallied for a second day and government bonds advanced as oil gained and Danske Bank A/S said the currency of the world’s biggest energy exporter offers the best way to wager on a recovery in crude.

The ruble added 1.4 percent against the dollar to trade at 75.8440 as of 6:02 p.m. in Moscow, almost erasing a 5.4 percent slump at the start of the week. Bonds rose, taking the drop in five-year yields to 22 basis points in the past two days as crude climbed.

Even with its economy in recession and sanctions still in place over Ukraine, Russia will weather its latest bout of economic turbulence, while the nation’s high interest rates are tempting to investors, according to Danske. A poll by Morgan Stanley predicted the ruble will end the year as the third-strongest currency in emerging markets.

“The ruble is the best levered bet on the oil recovery," Vladimir Miklashevsky, a strategist at Danske in Helsinki, said by e-mail. "If a year ago there were concerns about sanctions and image, nowadays investors are chasing stable macro and high carry. And Russia’s not looking very poorly, even despite the contraction."

Miklashevsky forecasts the ruble will appreciate almost 6 percent to 72 per dollar by the end of the year. At 11.97 percent, Russia’s three-month rates are the second-highest among 22 emerging-markets countries tracked by Bloomberg.

Ruble Preference

While investors surveyed by Morgan Stanley showed a preference for the ruble this year, they predicted that Russia’s local bonds will be the second-worst performers in the period. Government bonds, known as OFZs, have lost 8.2 percent in 2016 so far, the worst result among emerging countries.

“We expect those investors who are bullish on Russia are more willing to express their view via FX rather than local bonds," Morgan Stanley analysts led by Robert Tancsa said in an e-mailed note.

The Micex Index of stocks added 2.4 percent to 1,788, its strongest advance in a week. Brent crude rose for a second day, increasing 1.4 percent to $35.53 per barrel in London trading.

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