Bloomberg News

Ruble Rises Fourth Day on Bets Europe Debt Contagion Checked

October 10, 2011

Oct. 10 (Bloomberg) -- The ruble climbed for a fourth day against Bank Rossii’s target dollar-euro basket as investors bet Europe’s debt crisis will be contained, boosting demand for Russia’s exports to the euro area.

The ruble was 1.6 percent stronger at 31.5275 per dollar and rose 0.5 percent to 43.0301 versus the euro at the 7 p.m. close in Moscow, leaving it up one percent at 36.7037 against the basket. Investors pared bets the Russian currency would weaken further, with non-deliverable forwards showing it at 31.95 per dollar in three months.

“I’m positive, I’ve bought a bit of the ruble over the past few days -- I think it’s one of the currencies that has underperformed quite substantially,” Sergei Strigo, who helps manage about $1 billion as head of emerging-market debt at Amundi Group in London, said by phone. “If you’re positive on the Eurozone outcome, the ruble is one of the very good candidates to outperform the market in the next few months.”

French President Nicolas Sarkozy and German Chancellor Angela Merkel have given themselves three weeks to devise a plan to recapitalize banks, get Greece on the right track and fix Europe’s economic governance. Oil, Russia’s chief export earner, rose 3.3 percent to $85.68 per barrel in New York crude futures trading today. The European Union is Russia’s biggest trading partner.

“Currently what we’re seeing is a reflection of the better news globally, and that’s supporting the ruble,” Dmitry Polevoy, chief economist for Russia and Kazakhstan at ING Groep NV in Moscow, said by telephone. “The market is playing the news from Europe, hoping for bolder decisions from politicians on the Eurozone debt crisis.”

Russia’s dollar Eurobond due 2020 climbed, pushing the yield down 14 basis points, or 0.14 percentage point, to 5.12 percent. The yield on government dollar debt due 2015 declined 18 basis points to 4.02 percent.

--Editor: Alex Nicholson

To contact the reporter on this story: Jack Jordan in Moscow at jjordan22@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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