Ruble Climbs With Russian Bonds as Oil Uptick Offsets Syria Woeby
Finance Ministry sells all 10 billion rubles of 2025 floaters
Putin meeting Merkel in Berlin for Syria, Ukraine talks
The ruble climbed with local bonds as the biggest gain in the price of oil in more than a week eclipsed investor concern the nation may face new sanctions over its role in Syria.
Russia’s currency strengthened 0.8 percent to 62.29 against the dollar by 6:10 p.m. in Moscow, the biggest advance among 24 emerging market currencies tracked by Bloomberg. Bonds rose for a second day, pushing 10-year yields down 13 basis points to 8.40 percent after mounting tensions with the U.S. over Syria drove the rate up 19 basis points on Monday.
While traders are betting on wider swings for the ruble after Germany joined the U.S. and Britain in weighing fresh sanctions against the Syrian and Russian governments, a gain of as much as 2.8 percent in Brent on Wednesday helped support local asset prices. President Vladimir Putin visits Berlin for talks with Germany’s Angela Merkel after announcing a temporary moratorium on Russia’s bombing of Aleppo in Syria.
“The sentiment for Russian assets has improved as oil is rising,” said Denis Korshilov, head of fixed-income, currency and commodities at Citigroup Inc.’s Russian unit in Moscow. A 40 basis-point jump in ruble bond yields this month means “they’ve once again become attractive for some market players," he said.
Three-month implied volatility in the ruble, a measure of how much traders project the exchange rate will fluctuate in the period, was at 13.7 percent on Wednesday, up more than 1.5 percentage points from a two-year low at the start of the month.
Oil rose on Wednesday after the Energy Information Administration reported that U.S. crude inventories fell last week and Saudi Arabia’s energy minister said many nations are willing to join OPEC output cuts. Brent reached $53.1 a barrel in London, the biggest one-day gain since Oct. 10.
The ruble is also being supported by upcoming monthly tax payments, for which Russian companies usually buy rubles, according to Korshilov. Sberbank CIB estimates the size of this month’s tax bill, the heaviest portion of which is due next week, at about 1.1 trillion rubles ($17.6 billion).
Russia’s Finance Ministry sold all 10 billion rubles of January 2025 floaters at auction on Wednesday. The demand at auction was 33.9 billion rubles, according to the Moscow Exchange.