Ruble Climbs to 11-Month High, Fueling Verbal Intervention Bets

  • Officials may try to talk ruble down, Rabobank’s Matys says
  • Ruble’s RSI is closest to overbought level since April

The ruble rose to near the strongest level in a year lifted by $50-a-barrel oil, prompting speculation Russian officials will talk down the currency’s gains in a bid to keep exports from becoming uncompetitive.

The Russian currency climbed 0.6 percent to 62.4175 against the dollar as of 6:15 p.m. in Moscow, its highest since Nov. 3. Crude oil, Russia’s main export earner, is helping drive the ruble’s relative strength index to the closest to the level that can signal a currency is overbought since April.

When the Russian currency was at similar levels in July, President Vladimir Putin warned his prime minister that its appreciation relative to oil needed to be watched, spurring a decline in the currency. While crude prices have recovered, the ruble’s gains have shrunk the value of oil in local-currency terms, depriving the government of revenue needed to tackle the widest budget deficit since 2010.

“Russian officials may intervene verbally to slow down the pace of the ruble’s appreciation,” said Piotr Matys, a currency strategist at Rabobank in London. The ruble is rallying on the “spike in oil prices above the psychological level of $50 per barrel."

Absent any warnings to contain the ruble, its strength could lead the Bank of Russia to push ahead with monetary easing, according to Matys. The central bank boosted the appeal of the ruble carry trade at its last last meeting in September when it pledged to keep the key rate unchanged for the rest of the year.

Bonds rose, with the yield on five-year securities falling 10 basis points to 8.30 percent, the lowest since Sept. 15. The Micex stock index added 0.2 percent to 1,981.48.

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