Azernews.Az

By Bloomberg

The ruble strengthened for a second day amid investor speculation exporters were buying the currency before tax payments, while Russian government bonds rebounded.

The ruble strengthened 0.7 percent versus the dollar, extending its gain in the past month to 2.7 percent, the best performance among its peers. Yields on government bonds due 2027 fell before the Finance Ministry was due to announce parameters for a Wednesday bond auction. Stocks headed for their steepest increase in two weeks.

Russian companies will pay about 1.3 trillion rubles ($21 billion) in taxes this month, with the heftiest payments due March 25, according to a survey of five economists conducted by Bloomberg. The ruble, which has been pummeled in the past 12 months by declining oil prices and the conflict in Ukraine, is being cushioned by exporters selling foreign-currency revenues, according to OAO Alfa Bank and Sberbank CIB.

“The key priority for the Russian currency market at the moment is tax payments,” Igor Akinshin, a foreign-exchange trader at Alfa Bank in Moscow, said by e-mail. “The biggest payments and key ruble movements are ahead of us.”

The currency appreciated to 61.5870 against the greenback as of 12:08 p.m. in Moscow after sliding 1.7 percent on Friday following the central bank’s decision to lower borrowing costs.

Economic Woes

Even after this month’s gains, the ruble has lagged its 23 emerging-market peers in the past year as sanctions imposed on Russia by the European Union and the U.S. weighed on an economy already reeling from lower oil prices.

Crude, Russia’s main export earner, was little changed at $53.53 in London, leaving its plunge since last March at 50 percent. The yield on local-currency bonds due February 2027 dropped 11 basis points to 12.98 percent after jumping 40 basis points a day ago.

The ruble “could see a larger movement next week on tax payments,” Iskander Abdullaev, an analyst at Sberbank CIB, said by e-mail. “Investors are prepared to push the ruble higher.”

The currency will rise to 57 by the end of March if Brent prices remain stable, Abdullaev said, implying an appreciation of more than 8 percent from current levels.

The dollar-denominated RTS Index added 2 percent to 829.11 on Tuesday, the first advance in three days. The Micex Index rose 0.5 percent to 1,618.62, led by OAO Gazprom and OAO Lukoil.

Further Sanctions

OAO Alrosa, Russia’s biggest diamond producer, gained 3.3 percent. The stock was included in the Market Vectors Russia Index with a weighting of 1.9 percent, which could trigger $33 million of inflows into the corresponding exchange-traded fund, VTB Capital analyst Ilya Piterskiy said in an e-mailed note on Monday.

The Market Vectors Russia ETF had $12.7 million in outflows yesterday, the most since Jan. 27, according to data compiled by Bloomberg.

German Chancellor Angela Merkel said a day ago that the EU would consider imposing further sanctions on Russia at a summit this week if there’s a major violation of a cease-fire in eastern Ukraine, which has been in place since mid-February.