Bloomberg News

Ruble Rallies Most in Two Weeks as Oil Trades at 3-Month High

August 21, 2012

The ruble appreciated the most in more than two weeks against the dollar as oil, the nation’s chief export earner, traded at a three-month high.

The Russian currency strengthened 1.1 percent versus the dollar to 31.7159 by the close in Moscow, the most since Aug. 6. The ruble was unchanged against the euro at 39.57 and gained 0.6 percent against the central bank’s currency basket, which is 55 percent dollars and 45 percent euros, to 35.2502.

Crude for September delivery rose as much as 1.7 percent to $97.60 in New York trading, the highest since May 7. Brent crude added 1.4 percent to $115.23 a barrel.

“The ruble strengthens on higher oil prices,” said Maxim Korovin, a Moscow-based analyst at VTB Capital. “Russian exporters are exchanging their dollars into rubles to pay taxes at the end of the month, which supports the ruble.”

Investors pared bets on the ruble weakening against the dollar, with non-deliverable forwards showing the currency at 32.2093 in three months versus 32.57 on Aug. 20.

“The oil rally is speculative and not justified by fundamental demand and supply balance, and the Eurozone crisis hasn’t vanished,” Sergey Fishgoyt, deputy head of foreign exchange at Otkritie Financial Corp., said by telephone. “Therefore, the ruble may drop significantly within a month.”

The extra yield investors demand to own Russia’s dollar bonds over U.S. Treasuries fell nine basis points to 210, according to JPMorgan Chase & Co.’s EMBI Global Index. Yields on the government’s ruble bonds due April 2021 fell to 7.83 percent, data compiled by Bloomberg show.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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