Russian Assets Lead Gains in Emerging Markets as Oil Advances

  • Brent crude jumped after report showed U.S. inventories fell
  • Investors pulled $39.4 million from biggest Russia ETF Tuesday

Russia’s ruble and stocks advanced the most in emerging markets as oil’s jump after a decline in U.S. crude stockpiles renewed investor appetite for the assets of the world’s biggest energy exporter.

The ruble surged 1.7 percent to 65.209 against the dollar by 6:14 p.m. in Moscow, while the dollar-denominated RTS Index climbed 3 percent. Brent crude jumped 3.2 percent to $47 a barrel after a government report showed that U.S. crude inventories unexpectedly declined.

“The ruble will continue rising on higher oil prices, the Russian currency is strong,” Vladimir Bragin, head of research at Alfa Capital in Moscow, said by phone. Bragin sees the ruble rising to 60 against the dollar if oil continues to gain.

Russian markets are rising as a two-year selloff in oil eases on production curbs in the U.S. The ruble has advanced 20 percent in the past three months, leading gains among major currencies, and its government bonds have generated the second-biggest returns globally after Brazil this year. Sales of oil and natural gas bring in about a third of Russia’s budget revenue and almost 60 percent of exports.

The ruble’s world-beating rally may have further to run, according to technical indicators. The currency’s 50-day moving average against the dollar broke above its 200-day average for the first time in almost a year.

Five-year government bonds rose, pushing yields down 10 basis points to 9.03 percent. The Finance Ministry sold all 10 billion rubles of fixed-coupon OFZ bonds due September 2031 and all 20 billion rubles of fixed-rate notes due August 2021.

The VanEck Vectors Russia ETF had $39.4 million in outflows on May 10, according to data compiled by Bloomberg. Investors withdrew $69.8 million from the exchange-traded fund last week.

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