Azernews.Az

By Bloomberg

Russian bonds rallied, heading for a second weekly advance, as investors wagered the central bank will push ahead with interest-rate cuts on Friday to tackle an economic slowdown.

Central bank Governor Elvira Nabiullina will lower borrowing costs to 14 percent from 15 percent, according to the median forecast in a poll of 32 analysts by Bloomberg that ranges from nine seeing no change to one forecasting a 250 basis-point reduction. While the ruble is headed for its first week of declines in six, it has shown resilience in the face of deeper cuts and is 13 percent stronger since a surprise rate cut on Jan. 30.

“A rate decrease is practically guaranteed, the only question is the pace,” PAO Rosbank analyst Evgeny Koshelev said in an e-mailed note from Moscow. “The only thing that can surprise us and the market is some sort of a borderline decision -- either no change, or an aggressive decrease” of 300 basis points or more, he said.

Yields on the government’s benchmark bonds due Jan. 2028 fell two basis points to 12.63 percent as of 11:46 a.m. in Moscow, the lowest on a closing basis since Feb. 20. The ruble was little changed at 61.1980, set for a 1.2 percent decline in the week.

The dollar-denominated RTS Index of stocks declined 0.4 percent to 856 as crude, Russia’s main export earner, slid for a second day in London, falling 0.6 percent to $56.76 per barrel.

Policy makers cut the key rate 200 basis points at their January meeting, partly unwinding the 650 basis-point interest- rate increase in December that was taken at an emergency meeting as the ruble plunged to record lows amid an oil slump and sanctions over Ukraine.

Forward-rate agreements compiled by Bloomberg showed expectations for a 158 basis-point cut in benchmark borrowing costs in the next three to six months, up from 47 basis points at the start of last week. The implied rate on a one-year dollar-ruble swap fell for the ninth day, declining 40 basis points to 13.16 percent.