Ruble Advances as Putin Signals Support for OPEC Oil Output Cutsby
Russian currency strengthens to 1-year high as crude rallies
Russia gets about half of budget revenue from oil, gas sales
The ruble erased earlier losses after President Vladimir Putin signaled that Russia is ready to support OPEC oil-production cuts, boosting the price of the nation’s key export earner.
The currency rose 0.4 percent to 61.9575 against the dollar by 6:30 p.m. in Moscow, after falling as much as 0.5 percent earlier. A close at this level would be the strongest since October 2015. Russian stocks climbed 1 percent as crude prices advanced to the highest since August 2015 in London.
“Putin’s comments give investors hope that nations will come to an agreement on limiting oil supply, which would lead to the rise in the oil price and the ruble’s strengthening,” said Oleg Popov, a money manager who oversees $300 million of assets at April Capital in Moscow. “Whether this will materialize into something concrete--time will show."
As the Russian president said during a visit to Turkey the country is ready to coordinate efforts with other producing nations to prop up oil markets, Saudi Arabia’s energy minister said prices may recover to $60 a barrel by the end of 2016. Brent has risen 17 percent since the the Organization of Petroleum Exporting Countries announced its first supply cut in eight years. Russia receives about half of its budget revenue from oil and natural gas sales.
The 60-day correlation between the Russian currency and oil climbed to 0.6, the highest in a month. A reading of 1 would mean the two assets trade in lockstep. Brent in ruble terms climbed 2.4 percent to 3,306 a barrel, nearing a peak for the year reached on June 2.
Russian five-year bond yields climbed six basis points to 8.64 percent, taking the increase since Sept. 16, when the central bank said it won’t cut rates until next year, to 20 basis points.