Ruble Slips From Eight-Month High as Dividend Support Weakens

  • Sberbank sees ruble gains ‘restrained’ through end of month
  • Micex Index on course for 2.5% weekly gain, RusHydro advances

The ruble declined for the first day in four, paring its weekly gain, as Russian exporters slowed the pace of converting export revenue for local dividend payments, removing support that helped the currency outperform the price of oil.

The Russian currency retreated from an eight-month high, declining 0.7 percent versus the dollar to 63.300 by 4:40 p.m. in Moscow and trimming its advance over the week to 1.2 percent. Brent crude reversed earlier losses and rose 0.8 percent in London trading to $47.78 per barrel, heading for a gain of 2.2 percent this week.

Support from dividend payments and a broader rally in emerging-market assets has helped the Russian currency outperform crude in the last two weeks, according to Sberbank CIB, the investment-banking arm of the nation’s largest lender. MSCI Inc’s index of developing-nation currencies dropped less than 0.1 percent on Friday to 1,527 after reaching the highest level since July 29 last year.

Exporters, wary that the ruble would appreciate further, were active buyers of the currency in the first half the month, Iskander Lutzko, strategist at Sberbank CIB, said by e-mail. While the ruble may rise further in the second half of the month, the pace of those conversions is slowing, he said.

“We might see further ruble strengthening, but it will be more restrained than before," Lutzko said.

Eighty percent of dividend payments are due in the last week of July, as well as about 1.3 trillion rubles ($20.6 billion) of regular local taxes, according to Sberbank CIB calculations. About $8.7 billion of export revenue may be sold in the final week, analysts said.

The Micex Index of major stocks fell 0.2 percent to 1,938.89, heading for a 2.4 percent gain for the week, as RusHydro PJSC gained 1.8 percent. Government bonds retreated, lifting the yield on five-year notes three basis points and paring the weekly decline to 15 basis points.

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