Ruble Rises as Oil Bolsters ‘Most Attractive’ Emerging Currency

  • High rates and current-account surplus boost ruble appeal: CS
  • Russian 5-year bonds advance, with the yield at 1-week low

Russia’s ruble climbed to a three-month high amid prospects for stimulus in major economies as Credit Suisse Group AG called it the "most attractive" emerging-market currency at current oil-price levels.

The ruble added 1.4 percent to 62.96 rubles by 5:55 p.m. in Moscow, the second-best performing currency in emerging markets after South Africa’s rand. Five-year government bonds also advanced. Brent crude increased 1.6 percent to $46.96 a barrel after losing almost 5 percent yesterday.

Emerging-market assets have rallied amid bets developed nations from the U.K. to Japan will implement monetary easing and the Federal Reserve will delay interest rate increases. Ruble investors have seen returns of 17 percent against the dollar this year, the most in emerging markets after Brazil’s real, as an inflation-targeting central bank limited the pace of monetary easing and oil prices stabilized.

"The ruble is moving in line with global risk appetite and remains the most attractive emerging-market currency with oil prices at the current level," Alexey Pogorelov, an economist at Credit Suisse Group AG in London, said. “There is no other currency that would have that favorable combination of current-account surplus and positive real interest rates."

Russia’s current-account surplus in the first half of the year was $15.9 billion, the central bank said July 11. The Bank of Russia will announce its key rate decision on July 29, with derivatives traders predicting 58 basis points of reductions to the base rate of 10.5 percent over the next three months.

The Micex Index of shares advanced 0.2 percent to 1,940. Five-year bonds rose, pushing the yield down five basis points to 8.7 percent.

“The ruble and its emerging-market peers are supported by the prospect of more stimulus from other major central banks, which fuels demand for high yielding emerging-market bonds,” said Piotr Matys, a strategist for emerging-market currencies at Rabobank in London.

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