The ruble slumped to a one-year low before U.S. employment data that may bolster the case for cutting stimulus.
The Russian currency declined 0.6 percent against the dollar-euro basket to 37.0331 by 12:32 p.m. in Moscow after slumping as low as 37.1424, the weakest in 12 months. The ruble depreciated 0.7 percent versus the dollar to 32.3270, while the yield on the government’s benchmark ruble bonds due in 2027 increased one basis point, or 0.01 percentage point, to 7.63 percent, according to data complied by Bloomberg.
“The market is impatiently waiting today for the U.S. employment report, the key indicator of estimating the prospects of the Fed tapering,” Dmitry Polevoy, analyst at ING Groep NV in Moscow, said in an e-mailed note.
The U.S. Labor Department report at 8:30 a.m. New York time will probably show companies boosted payrolls by 163,000 workers last month, after they increased by 165,000 in April, according to the median forecast of 90 economists in a Bloomberg News survey. The unemployment rate held at a four-year low of 7.5 percent, according to the survey.
“History tells that ruble tends to overshoot, and we would now expect the basket to test 37,” VTB Capital analysts Maxim Korovin and Anton Nikitin said in an e-mailed report.
Brent crude gained 0.4 percent to $103.97 per barrel, rising for the second day. The oil and natural-gas industries contribute about half of Russia’s budget revenue.
“Given encouraging crude performance, we believe that a further marked ruble dip would be a good buying opportunity –- especially in light of attractive Russian domestic rates after the sell-off in the OFZ market,” Korovin and Nikitin said.
Bank Rossii will review interest rates on June 10. It will hold the refinancing rate at 8.25 percent for a ninth month, according to 22 of 26 economists in a Bloomberg survey. Four forecast a quarter-point cut. The main lending and deposit rates will also be kept unchanged, two separate surveys showed.
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