The ruble strengthened against the central bank’s dollar-euro basket and the yield on Russia’s $3.5 billion of bonds due 2020 fell as Urals crude traded near a 3 1/2-year high and after a report yesterday signaled a recovery in the U.S., the world’s largest economy.
The Russian currency rose 0.4 percent to 33.4994 against the basket by the 7 p.m. close in Moscow, taking its weekly advance to 0.6 percent. The yield on the 2020 bonds dropped four basis points, or 0.04 percentage point, to 3.909 percent.
Urals crude, Russia’s main export, traded within $1.36 of its highest price since July 2008 after a U.S. government report yesterday showed the number of first-time jobless claims fell to a level matching a four-year low. Russians will go to the polls this weekend as Prime Minister Vladimir Putin bids to return to the presidency.
“The market is sure that after the election results everyone will go into the ruble, with this level of oil,” Dmitry Sinitsyn, head of foreign exchange in Moscow at Credit Suisse Group AG. “I am sure they will be punished. The ruble level is not a question of the election, the main point for me is the central bank which is buying the dollar against the ruble every day.”
Bank Rossii manages the ruble within a so-called “floating corridor” against a basket of dollars and euros to limit swings that erode exporters’s competitiveness. The central bank may be buying as much as $250 million a day in foreign currencies to slow the ruble’s advance after it passed 33.87 against the basket Feb. 24, according to VTB Capital’s estimates.
The ruble was little changed at 29.275 per dollar, leaving it down 0.3 percent overall this week, the first decline in nine weeks. The Russian currency was 0.8 percent stronger at 38.6625 per euro.
Investors increased bets on the ruble weakening, with non- deliverable forwards showing the Russian currency at 29.6678 per dollar in three months, compared with expectations of 29.6275 per dollar yesterday. The yield on Russia’s domestic ruble- denominated bonds due March 2018 rose two basis points to 7.67 percent.
Dollar-denominated government bonds due 2015 fell, pushing the yield down one basis point to 2.298 percent. Eurobonds due the same year issued by OAO Sberbank, Russia’s largest lender, yielded 27 basis points less than yesterday at 3.34 percent, while the yield on similar-maturity debt from state gas monopoly OAO Gazprom fell 17 basis points to 3.296.
The cost of protecting Russian debt against non-payment for five years using credit-default swaps fell three basis points to 178 basis points, down from last year’s peak of 338 on Oct. 4, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
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