Ruble Climbs Before Doha as Putin Seeks to Reassure Russians

  • Ruble is best-performing major currency in past 3 months
  • Putin's call-in Q&A event lasted about 3 hours 40 minutes

The ruble climbed as Brent crude advanced before a meeting of major producers this weekend and as President Vladimir Putin assured Russians the economy will resume growth next year during his annual call-in show.

The currency strengthened 0.5 percent to 65.9750 against the dollar by 7:55 p.m. in Moscow, after dropping as much as 0.8 percent. The gain left the ruble up 15 percent in the past three months, the best performance among 31 major counterparts.

Oil, which along with natural gas account for about half Russia budget revenue, climbed before Russia, Saudi Arabia and other major producers meet in Doha on April 17. Oil market watchers see a 50-50 chance that producers will agree to freeze output. The situation for the country hasn’t been resolved, but the trend is “positive,” Putin said in his annual call-in show.

"While the ruble is firmer against the US dollar as Brent crude is marginally higher on the day, the dollar-ruble pair is still trading above Wednesday’s low,” said Piotr Matys, an emerging-markets currencies strategist at Rabobank in London. So the outlook for any further gains beyond yesterday’s level is limited, he said.

Brent crude advanced 0.5 percent to $44.38 a barrel, erasing losses of as much as 2 percent, as the International Energy Agency predicted that global oversupply will almost vanish in the second half of the year. Qatar said it has a “positive feeling” about the Doha talks.

Putin Direct

Putin sought to reassure Russians, pointing to forecasts that the economy will contract by 0.3 percent this year and expand by 1.4 percent in 2017. Last year Putin assured Russians that the ruble would rebound from a 28 percent slump over the previous year because the country’s economic problems had “passed the peak” while oil stabilized. Russia’s main export earner instead continued its freefall and sent the currency plunging 25 percent since Putin’s prediction on April 16, 2015.

Russia’s economic hardship comes as parliamentary elections in September present the president with his biggest electoral test since he returned to the Kremlin in 2012 after unprecedented protests against him.

“Everything will depend on oil,” Vladimir Vedeneev, the chief investment officer of Raiffeisen Asset Management in Moscow, said by e-mail. “The main issue is the structure of the economy, which hasn’t changed over the past 15 years. That’s why we can’t expect to see high-quality growth even if oil prices stabilize."

The Micex Index of shares fell 0.8 percent to 1,915.85. Five-year generic bonds were down for the second day, lifting the yield up two basis points to 9.34 percent.

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