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By Bloomberg

The ruble headed for its first monthly decline since January as the central bank sold the Russian currency, fueling speculation policy makers are returning to a managed exchange rate.

The ruble traded 0.1 percent weaker at 52.65 as of 2:13 p.m. in Moscow, taking its monthly drop to 1.8 percent. Russia’s five-year government notes were little changed, increasing the yield one basis point to 10.95 percent. Brent crude rose 1 percent, trimming its monthly slide to 5.4 percent.

The world’s best currency rally this year faded in May as the Bank of Russia intervened following warnings by officials that the ruble’s rebound was overdone. The central bank says it’s buying foreign currency to restock reserves, not to target the exchange rate, and on Friday the Finance Ministry clarified comments by the minister that suggested the Bank of Russia aims for a particular ruble level.

“It very much looks like a corridor,” Yury Tulinov, head of research at PAO Rosbank in Moscow, said in e-mailed comments. “The lower boundary at 50 is more or less clear, so it’s time to find the upper.”

Russia switched to a freely floating exchange rate in November, abandoning regular interventions as it burned through $90 billion of reserves in the year to slow the ruble’s worst depreciation since the 1998 debt crisis. The latest interventions are stoking speculation the central bank has partially returned to the old system, when policy makers bought and sold currency to keep the ruble within a corridor against a basket of euros and dollars.

Siluanov Clarification

“Those decisions by the central bank, which is now acting by boosting its FX reserves on the market, show that it will support the levels that are now in place,” Finance Minister Anton Siluanov told a conference in Vladimir today. “We have an excellent understanding with the central bank about certain exchange rate levels that need to be seen as guidance.”

In a separate statement, the Finance Ministry said Siluanov meant that the currency purchases show the central bank sees the real ruble rate as balanced and referred to guidance for the real effective ruble rate in the long term.

“It still leaves some question about the officially-stated policy goals and their prioritization by authorities,” ING Groep NV economist Dmitry Polevoy said in an e-mailed note.

After buying $200 million per day since May 14, the central bank purchased $150 million on May 27, when the ruble sank to 52 per dollar, it said on its website today.

With oil down in the month and the ruble 6 percent weaker since the interventions started, policy makers can trim the amount of currency they buy, according to Oleg Kouzmin, chief economist at Renaissance Capital in Moscow.

Reducing Purchases

“The central bank is reducing the foreign currency purchases as the overvaluation of the ruble declines,” Kouzmin said in e-mailed comments.

A weaker ruble helps the budget of the world’s biggest energy exporter because it boosts local-currency revenue collected from exports. The price of a barrel of Brent in rubles is 3,343, about 6.5 percent below the average for the last 12 months. The central bank may stop buying dollars at 55-56 rubles if the oil price stays at $60 per barrel, Kouzmin said.

“We view the foreign currency management effort as the main idea behind such interventions,” Vladimir Osakovskiy, chief economist for Russia at Bank of America Corp. in Russia. “Reserves accumulation goal is not primary at all, as reserves remain well sufficient under any measurement.”

The Micex Index of equities gained 1 percent to 1,673.43, trimming its drop in the month to 0.9 percent.