Ruble Trims Worst Week Since February on U.S. Data, Oil Rebound

Updated on
  • UFG Wealth Management's Potapov sees crude advance temporary
  • Jobs data pushes ten-year bonds to gains for a second day

Russia’s ruble pared the steepest weekly decline since February as crude oil advanced and speculation U.S. interest-rate increases will be delayed bolstered investor appetite for the currency of the world’s biggest energy exporter.

The currency erased declines of as much as 1.1 percent, trading 0.3 percent stronger at 65.6770 as of 7:11 p.m. in Moscow. The reversal came after worse-than-forecast U.S. jobs data, trimming the ruble’s decline to 1.5 percent this week. Crude oil, which contributes 60 percent of Russia’s export revenue along with natural gas, jumped 2 percent to $45.92 per barrel, reducing its sharpest weekly drop since January to 4.7 percent.

Bets that the U.S. won’t increase rates increase the appeal of local-currency assets in Russia, where the main central bank lending rate remains the highest among key emerging markets in Europe, the Middle East and Africa. The ruble has given the best carry returns in emerging markets in the past three months against the greenback.

“The U.S. statistics are weak and the expectations of a rate increase in June are close to zero now,” which is helping lift the ruble, Aleksei Potapov, an analyst at UFG Wealth Management in Moscow, said in e-mailed comments. At the same time, “oil’s gain is technical after declines this week, and its retreat will continue,” he said.

Employers in the U.S. in April added 160,000 workers, the fewest number in seven months. That compared with the median forecast in a Bloomberg for a 200,000 advance. The first weekly retreat for crude comes after U.S. stockpiles rose to the highest since 1929 and production increased in April from OPEC members.

Bonds gained for a second day, lowering the yield on 10-year government debt by two basis points to 8.97 percent and trimming the gain in the week to seven basis points. The Micex Index closed down 0.3 percent at 1,901.56, taking its weekly retreat to 2.6 percent, the most since February.

Russian markets are closed on Monday for a holiday.