Bloomberg News

Ruble Drops 2nd Day on Lower Oil, Dollar Demand After Dividends

August 29, 2012

The ruble weakened for a second day as oil, Russia’s chief export earner, declined and demand for foreign currency increased as investors sought to convert domestic dividend payments.

Russia’s currency depreciated 0.5 percent against the dollar to 32.1750 at 7 p.m. in Moscow, the weakest level since Aug. 3. It slipped 0.2 percent versus the euro to 40.3150, leaving it 0.3 percent lower against the central bank’s currency basket. The ruble strengthened 0.7 percent against the dollar last week as companies snapped up the currency to pay taxes.

“The tax payments, ended yesterday, supported the ruble but it smashed against the strong purchase of U.S. dollars partly due to conversion of dividends that non-residents received from a number of large Russian companies,” Dmitry Polevoy, a Moscow-based economist at ING Groep NV, said by e- mail.

Brent crude slid less than 0.1 percent to $112.50 a barrel. Russian companies paid about 400 billion rubles ($12.4 billion) this week in taxes, Polevoy said. The domestic market began to close ruble positions following the payments as well as in anticipation of U.S. Federal Reserve Chairman Ben S. Bernanke’s speech at the end of the week, he said.

The Russian Finance Ministry today sold 2.6 billion rubles) of five-year so-called OFZ bonds, below the planned 10 billion rubles, at a yield of 7.57 percent. The amount was the least at an auction since November 2011, according to Finance Ministry data.

The extra yield investors demand to own Russia’s dollar bonds over U.S. Treasuries fell six basis points to 219, according to JPMorgan Chase & Co.’s EMBI Global Index. An index of five-year government bond yields compiled by Micex rose more than 5 basis points to 7.66 percent, data compiled by Bloomberg show.

To contact the reporter on this story: Lyubov Pronina in Moscow at lpronina@bloomberg.net

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


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