Ruble Jumps on Crude as Morgan Stanley Sees Limited Brexit Pain

  • Currency also getting support from companies paying taxes
  • Sanctions have cut Russia’s external exposure: Morgan Stanley

The ruble strengthened for the first day in three amid climbing oil prices and exporters buying the currency to pay taxes as Morgan Stanley predicted Britain’s decision to leave the European Union would have a muted impact on Russia.

The Russian currency advanced 1.4 percent to 64.575 against the dollar by 5:52 p.m. in Moscow, trimming a 2.5 percent slide in the previous two trading sessions that was sparked by the U.K. referendum result. Government bonds rose for a second day and the benchmark Micex Index climbed as Brent oil jumped as much as 3 percent.

The financial impact from the so-called Brexit will be “limited” because two years of foreign sanctions over Ukraine have “dramatically” cut Russia’s external exposure, Morgan Stanley analysts including Pasquale Diana wrote in a note today. Monthly corporate taxes due on Tuesday, estimated by Sberbank CIB at 172 billion rubles ($2.66 billion), are also helping the ruble as exporters buy the local currency to make payments.

“Traders are realizing that Brexit is unlikely to have a major effect on Russia and oil is trading at comfortable levels." Artem Roschin, a currency trader at Aljba Alliance LLC in Moscow, said by phone. “The ruble is curbing its declines because today is a big tax payment day.”

Five-year generic local bonds gained for the second day, reducing the yield three basis points to 8.73 percent. The Micex stock index added 0.7 percent. The biggest Russian stock exchange-traded fund VanEck Vectors Russia ETF had $12.5 million inflows on June 27.

The Finance Ministry will offer 8.15 billion rubles of August 2021 fixed-coupon OFZs and 12.4 billion rubles of May 2019 fixed-coupon OFZs on Wednesday, the ministry said on its website.

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