Ruble Climbs Second Day With Bonds on $50 Oil, Lower Brexit Odds

  • Russian currency is best in emerging markets after rand
  • Monthly tax payments also supporting currency, Citi says

Russia’s ruble climbed for a second day with government bonds as local tax payments and oil trading above $50 per barrel added to investor appetite for riskier assets amid optimism Britons will vote to stay in the European Union.

The currency climbed 1.2 percent to 64.10 per dollar by 6:47 p.m. in Moscow, headed for the strongest two-day rally since March. Five-year bonds advanced, reducing the yield by the most in three months. Brent crude jumped as much as 2.7 percent to $50.50 a barrel, helping propel a 1.2 percent gain in the Micex stock index.

Russian markets are benefiting along with those of other emerging markets as the odds of a U.K. departure from the European Union fell to 30 percent from as high as almost 45 percent last week. The ruble was the best-performing currency among developing nations after South Africa’s rand on Monday as the rebound in crude and dollar and euro sales by exporters as they prepare to pay local taxes bolstered the currency of the world’s biggest energy exporter.

“Though uncertainty remains, the probability of Brexit went down significantly, oil is heading toward fifty-plus again, other emerging-market currencies are feeling good, so the ruble follows suit,” said Denis Korshilov, head of fixed-income, currency and commodities at Citigroup Inc.’s Russian unit in Moscow. “The ruble will also have support from exporters, as tax payment period approaches.”

Korshilov estimates the ruble will strengthen to 62 per dollar by the end of the year. The yield on five-year generic bonds fell 14 basis points to 8.93 percent, while the Micex Index climbed to 1,899.92.

Hedge funds and other large speculators increased net ruble long positions to 6,227 futures in the week ended June 14, a three-year high, up from 4,178 contracts in the prior five trading days, U.S. Commodity Futures Trading Commission data show.

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