Azernews.Az

By Bloomberg

The ruble gained for the first time in three days after Brent crude rebounded from its lowest level in more than five years yesterday.

Russia’s currency advanced 2.9 percent to 61.46 per dollar at 12:32 p.m. in Moscow. Government bonds rose, with the five- year yield falling one basis point to 15.42 percent, while the Micex Index of stocks rose 3.5 percent to 1,532.93, the highest level in a month.

The ruble has recouped part of its 12 percent loss from the previous two sessions as Brent traded at $51.25 per barrel in London today after briefly falling below $50 yesterday, the lowest level since 2009. Russia is the largest global energy exporter, with half its budget revenue coming from sales of oil and natural gas.

The ruble’s move may be partially explained by traders “covering their short positions,” bets on further weakening, after two days of strong declines, Jean-David Haddad, an emerging-markets strategist at OTCex Group brokerage in Paris, said by e-mail. “The ruble rebound is purely technical. There is absolutely no liquidity, partly due to the Russian holiday season.”

Low Volumes

Trading in the dollar-ruble spot market on the Moscow Exchange remained light, reflecting the national holidays. About $279 million changed hands on the spot currency market, compared with a daily average of $4.8 billion in the past 12 months.

Russia’s economy may shrink as much as 4.7 percent this year if oil averages $60 a barrel under a “stress scenario,” the central bank said in December. Net capital outflows may have reached $134 billion in 2014, central bank data show.

Five-year credit default swaps declined 29 basis points to 548 after rising to 603.5 on Jan. 6, the highest level since March 2009 on a closing basis and the fifth-highest sovereign globally. The contracts rose 127 basis points from the beginning of the year to the Jan. 6 peak.

“People seem to be coming to the conclusion that the current Russian issues will not be short and just tied to the military conflict in Ukraine,” Haddad said. “There are some long-term bearish signals for Russia and this is what is reflected in CDS.”