Russia's Ruble Declines, Paring Third Week of Gains Before Doha

  • SocGen sees oil declining next week if Doha crude talks fail
  • Russian stocks had $8.6 million inflows in week to April 13

The ruble fell, paring its third weekly gain, as investors weighed the chances that a supply freeze to bolster prices will be agreed at Sunday’s meeting of major oil producers.

The currency of the world’s biggest energy exporter declined 0.5 percent to 66.45 per dollar by 7:30 p.m. in Moscow, leaving it up 1 percent for the week. Government bonds fell for a third day and the benchmark Micex stock index retreated.

Speculation the meeting in Doha will result in a deal is faltering after bets on a freeze helped the ruble extend the best rally among currencies globally in the past three months. Oil market watchers see a 50-50 chance that producers will agree to freeze output while Saudi Arabia has said it will only cap its output if Iran follows suit -- a notion Tehran has dismissed as “ridiculous.”

“The market seems to be overestimating the significance of the Doha meeting and of a possible agreement on supply, so next week I expect the oil price to decline,” said Yury Tulinov, head of research at Societe Generale SA’s Russia unit Rosbank PJSC in Moscow. “The ruble is consolidating before Doha and may weaken to about 67.5 against the dollar next week."

Brent slid 2.4 percent to $42.81 a barrel in London, trimming its advance in the week to 2.1 percent. Global oil markets will “move close to balance” in the second half of the year as lower prices take their toll on output outside OPEC, the IEA said in a report on Thursday.

Tax Support

A tax period in Russia in the second half of April may help support the currency while the effects may be delayed as exporters wait for the local currency to decline further before buying, according to Sberbank CIB. Corporations are due to pay about 1.3 trillion rubles ($19.7 billion) in taxes between April 15 and April 29, Sberbank CIB estimates.

“The ruble is still reacting to oil to some extent, but our sense is that most large exporters think the ruble will fall after the the Doha meeting,” said Tom Levinson, a foreign-currency and rates analyst at Sberbank CIB in Moscow. “For this reason they will likely bide their time before buying the ruble.”

The Micex Index of shares dropped 0.4 percent to 1,907.78. Funds invested $8.6 million into Russian stocks in five days ended April 13, according to Sberbank, which cited EPFR Global data. Five-year local-currency bonds declined, lifting the yield two basis points to 9.36 percent, the highest in a week.

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