The ruble erased yesterday’s declines against the dollar and bonds gained as rising U.S. retail sales bolstered appetite for riskier assets.
The Russian currency extended its advance to 0.6 percent after the central bank kept rates on hold today, before trading up 0.5 percent at 29.4824 by the 7 p.m. close in Moscow. Russia’s ruble bonds due April 2021 rose for a third day, lowering the yield seven basis points to 7.79 percent.
Bank Rossii refrained from cutting rates at its meeting after signaling that record-low inflation won’t last once pre- election price curbs are unwound. Better-than-expected German investor confidence data and U.S. retail sales rising by the most in five months bolstered the global economic outlook. Urals crude, Russia’s main export blend, added 0.5 percent to $124.20 a barrel.
The ruble weakened temporarily earlier in the day, erasing gains after the Finance Ministry said the budget deficit was 245.3 billion rubles ($8.3 billion) through the end of February after revising a January shortfall to a 27.2 billion ruble surplus.
Government dollar bonds due 2020 climbed for a third day, cutting the yield two basis points to 3.88 percent, the lowest since they were sold in April 2010. The currency jumped 0.9 percent versus the euro to 38.57 and added 0.7 percent to 33.5718 against the central bank’s target dollar-euro basket.
Bank Rossii left the refinancing rate at 8 percent, the Moscow-based central bank said in a statement on its website today. The decision was forecast by 19 of 20 economists in a Bloomberg survey. The overnight auction-based repurchase rate used to provide cash for banks was held at 5.25 percent and the overnight deposit rate will remain at 4 percent.
“The decision was made based on an estimate of inflation risks and prospects for economic growth given the continued external economic uncertainty,” the central bank said in a statement. Money-market interest rates are “acceptable for the coming months,” it said.
Inflation slowed to a post-Soviet low of 3.7 percent in February from a year earlier as fuel-cost caps and delayed utility-tariff increases curbed price growth amid Prime Minister Vladimir Putin’s presidential campaign.
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