Azernews.Az

By Bloomberg

The ruble headed for the longest stretch of weekly gains in nine months and Russian bonds extended the biggest advance in emerging markets, buoyed by oil near $60 a barrel.

Russia’s currency was little changed at 61.884 per dollar by 12:42 p.m. in Moscow, bringing its appreciation in the past five days to 2.6 percent. The ruble has climbed for three consecutive weeks as Brent crude, the grade used to price Russia’s main export blend, rebounded from six-year lows, improving the outlook for an economy poised for its first recession since 2009.

While oil was set to end a three-week rally in London, the ruble is at a “fair value” after underperforming crude at the start of the year, according to Raiffeisen Capital in Moscow. Government bond yields are near 11-week lows and stocks have risen the most worldwide in 2015 as leaders of Germany, Russia, France and Ukraine agreed to stand by a cease-fire following a breach by pro-Russian rebels in the town of Debaltseve.

“The ruble’s strengthening continues largely due to the positive dynamic in the price of oil and hopes for progress in Ukraine,” Vitaly Isakov, a money manager at Asset Management in Moscow, said by e-mail. “Market participants were too bearish on the ruble at the start of the year and are now adjusting their forecasts.”

The currency lost 1.8 percent to the dollar in 2015 after slumping 46 percent last year. Oil, which along with natural gas accounts for about 50 percent of state revenue, is up 4.7 percent since the start of January. The ruble is on course for its best monthly performance since Bloomberg started compiling data on the currency in 1993.

Bearish Bets

Appetite for Russian bonds has increased since the central bank unexpectedly cut its key interest rate by 200 basis points last month to 15 percent. That enabled the government to boost fundraising amid analyst bets it will post the widest fiscal deficit ratio since 2010 this year.

The yield on five-year local-currency notes fell one basis point to 12.72 percent on Friday, bringing the weekly decline to 63 basis points. The nation’s bonds have returned 23 percent in dollar terms this month, the most among 32 countries in the Bloomberg Emerging Market Local Sovereign Index.

The securities handed investors losses of 47 percent since Russia’s incursion into Crimea started almost a year ago, unleashing a standoff that led the U.S. and its allies to impose sanctions. Options traders remain more bearish on the ruble than on any of its 31 major peers, and strategists are cutting their forecasts to anticipate an 8 percent decline by mid-year.

“All news are priced into the Russian market,” Vladimir Vedeneev, the chief investment officer at Raiffeisen Capital, said by e-mail. “In order for the growth to continue, we need to see either strong signs about a speedy removal of sanctions or an extension of the rise in the oil price.”

The RTS Index rose 0.3 percent, extending this year’s rally to 15 percent. The Market Vectors Russia exchange-traded fund had a $10.7 million inflow on Thursday, bringing the weekly total to $139.34 million, the most since the period ended Sept. 26, data compiled by Bloomberg show.