Azernews.Az

By Bloomberg

The ruble strengthened for a fifth day even as a technical indicator showed the rally may have overshot as the price of oil, Russia’s key export earner, declined.

The currency climbed 0.3 percent to 55.3320 as of 1:09 p.m. in Moscow, taking its gain since March to 5.2 percent, the most worldwide after the Mauritanian ouguiya. The ruble’s relative strength index on Monday was above 70 for a second day, after breaching the level that typically indicates an asset is poised to weaken for the first time since May. Bonds fell before the Finance Ministry announces terms of tomorrow’s debt auction.

The ruble went from being the worst major currency in the world last year to the best performer in 2015 as oil stabilized and a cease-fire in eastern Ukraine held. The recovery has brought the Finance Ministry back to the local debt market with regular weekly auctions as the nation faces its widest deficit since 2010.

“The rally in the ruble looks stretched at current levels,” Iskander Abdullaev, an analyst at Sberbank CIB in Moscow, said in e-mailed comments. “The geopolitical status quo remains unchanged and could worsen at any time, hence the current improvement in risk perception is very sensitive.”

Russia may tomorrow hold its 12th bond auction this year after canceling 27 sales in 2014 as borrowing costs surged. Investor demand is returning after the Bank of Russia cut interest rates twice this year to help spur an economy that’s headed for its first recession since 2009.

Continue Cutting

“With the easing of inflationary risks, the Bank of Russia will continue to decrease the key rate,” central bank Governor Elvira Nabiullina said Tuesday in Moscow at a meeting of the Association of Russian Banks. Consumer-price growth accelerated to 16.9 percent from a year earlier in March, compared with 16.7 percent in February, the Federal Statistics Service said Monday.

Russia’s five-year government bonds fell, lifting the yield two basis points to 12.03 percent and paring the drop this year to 3.38 percentage points.

“Everyone who was holding foreign currency before is seeing the ruble’s strengthening trend and is selling currency,” Vladimir Evstifeev, an analyst at Bank Zenit in Moscow, said in e-mailed comments.

Pro-Russian rebels escalated attacks Monday in the Luhansk region, the regional governor said on his website. Brent slid 1.1 percent to $57.49 per barrel in London today, trimming yesterday’s 5.8 percent gain.

The ruble-denominated Micex index of stocks fell 0.2 percent, while the dollar-based RTS gauge declined 0.6 percent to 965.69.