The ruble rose for the first day in nine against the dollar, rallying from a three-year low as oil pared losses and the central bank increased its intervention to support the currency.
The Russian currency appreciated 0.7 percent to 33.451 per dollar by the 7 p.m. close in Moscow, the first gain since May 22. The country’s $3 billion of Eurobonds due 2042 rose, cutting the yield by two basis points, or 0.02 percentage point, to 5.533 percent.
Bank Rossii increased its sales of foreign currencies to $250 million to $300 million today after the ruble depreciated beyond 37.65 against its target dollar-euro basket, according to Andrew Mishko, head of foreign exchange at Nomos Bank in Moscow. The ruble pared losses and declined less than 0.1 percent to 37.2823 against the basket. Brent crude traded down 1.1 percent at $97.35 per barrel today after earlier losing as much as 2.8 percent.
“The central bank has a lot of ammunition to defend the basket’s declared upper limit,” Andrey Volkov, head of foreign exchange and money markets at ZAO Natexis Bank in Moscow, said by e-mail. “Mostly the ruble’s rise is on the verbal intervention of the authorities, which was absent during last week’s trading.”
Bank Rossii will sell more foreign currency to support the ruble if oil prices continue to fall, Interfax reported June 2, citing chairman Sergey Ignatiev in a meeting with Prime Minister Dmitry Medvedev.
The central bank manages Russia’s currency within a so- called “floating corridor” against a basket of dollars and euros to limit swings that erode exporters’ competitiveness. The central bank was selling about $200 million per day before the currency crossed 37.65 against the basket, Mishko said.
The ruble lost 0.6 percent to 41.9125 per euro, after earlier trading beyond 42 for the first time since November. Investors pared bets on the ruble weakening, with non- deliverable forwards showing it at 33.9795 per dollar in three months, compared with expectations of 34.174 per dollar yesterday.
“This is a trace of panic from local people, plus no help from the international markets -- oil’s a little bit lower,” Sergey Romanchuk, head of foreign exchange and money markets at OAO AKB Metalinvest Bank in Moscow, said by e-mail. “There’s no sign of recovery yet.”
The yield on Russia’s Eurobonds due 2015 dropped 12 basis points to 2.381 percent. Similar-maturity dollar debt from OAO Sberbank, Russia’s largest lender, yielded 14 basis points less than on June 1 at 3.965 percent, while the yield on 2015 Eurobonds issued by state gas monopoly OAO Gazprom declined 33 basis points to 3.908 percent.
The cost of insuring Russian debt against nonpayment over five years with credit default swaps rose four basis points to 281 basis points, according to data compiled by Bloomberg, the highest on a closing basis since Jan. 6.
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