Ruble Climbs Second Day on Crude Near $50 as Taxes Boost Demand

  • Companies need to pay about 620 billion rubles of tax in May
  • Savchenko’s release adds to investor optimism: Promsvyazbank

Russia’s ruble advanced for a second day, lifted by oil trading near $50 a barrel and a rush of exporters swapping their dollars for local currency to pay taxes.

The ruble rose 1.1 percent to 65.459 per dollar by 4:54 p.m. in Moscow, the strongest performance among major currencies. Government bonds climbed, lowering the yield four basis points to 9.18 percent on five-year notes as the Finance Ministry sold all 10 billion rubles ($152 million) in an auction of bonds due September 2031.

Much of the momentum behind markets in the world’s largest energy exporter came from a rallying Brent crude price on Wednesday. Adding to the ruble’s strength was increased demand for rubles from exporters converting foreign currency revenues, according to Promsvyazbank PJSC. About 620 billion rubles ($9.3 billion) in corporate tax bills are due by the end of the month, Sberbank CIB said.

“The ruble has all the chances to strengthen further at these oil prices,” Alexei Egorov, an analyst at Moscow-based Promsvyazbank, said by phone. “With oil near $50 and due to the tax period, the ruble should be at about 65.5 against the dollar."

An easing of international tensions after jailed Ukrainian pilot Nadiya Savchenko was sent home from Russia in a prisoner swap may also have added to investors’ appetite for Russian assets, Egorov said.

A further 10 billion ruble offer of August 2021 notes sold 7.08 billion rubles while international investors also bought $1.75 billion of Eurobonds on Tuesday in a deal organized by VTB Capital.

The Micex Index jumped 1.1 percent. VanEck Vectors Russia ETF had $1.68 million outflows on May 24, the fifth day of redemptions, according to data compiled by Bloomberg.

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