Oct. 5 (Bloomberg) -- The ruble strengthened against the dollar after the International Monetary Fund said European authorities were planning to recapitalize the banking industry and Russian Deputy Economy Minister Andrei Klepach said there were grounds for the currency to strengthen.
The ruble appreciated 0.5 percent to 32.56 per dollar at the 7 p.m. close in Moscow, its first gain since Sept. 27. The Russian currency was 0.3 percent stronger at 43.34 per euro, leaving it up 0.4 percent at 37.41 against the central bank’s target dollar-euro basket.
European-Union authorities are working on a plan to bring more capital to Europe’s banks, Antonio Borges, the IMF’s European department head, said today in Brussels. An effort to aid banks may help revive demand for Russia’s commodity exports in the euro area. Crude futures climbed 3.7 percent to $78.48 a barrel in New York.
“We’re still looking at macro factors pushing the ruble around,” Peter Rosenstreich, chief currency analyst at Swissquote Bank SA in Geneva, said by e-mail. Borges’s comments were an “excuse” for higher risk appetite, he said.
There are “grounds” for the ruble to rally 8.5 percent to 30 per dollar, Klepach told reporters in Moscow today.
“I think that’s credible,” Rosenstreich said. “The trend is toward tightening dynamics with oil, and I’m not sure oil will weaken much further.”
Investors pared bets the ruble will depreciate further, with non-deliverable forwards showing the currency at 33.1224 per dollar in three months, compared with 33.2968 yesterday. NDFs provide a guide to expectations of currency movements and interest-rate differentials.
Russia’s dollar Eurobond due 2018 was little changed, with the yield steady at 4.973 percent. The yield on Russia’s sovereign dollar bonds due in 2020 declined 12 basis points to 5.353 percent.
Russia’s central bank sold about $8 billion to shore up the domestic currency last month, the most since it arrested the ruble’s devaluation in January 2009, Chairman Sergey Ignatiev told reporters in Moscow today. Bank Rossii intensified sales yesterday, selling $1.15 billion on the currency market in a “bigger than usual” step, he said.
The central bank probably shifted the floating five-ruble band in which it manages the ruble to 32.65 to 37.65 versus its target dollar-euro basket after yesterday’s sales, Rosenstreich said today.
--With assistance from Artyom Danielyan in Moscow. Editors: Linda Shen, Peter Branton
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