Azernews.Az

By Bloomberg

The ruble retreated for the first time in three days as investors watched the results of a Federal Reserve policy meeting for signals on the pace of monetary tightening.

The Russian currency weakened 0.5 percent to 54.05 versus the dollar as of 11:47 a.m. in Moscow. That took its loss since mid-May to about 9 percent after the central bank started buying dollars last month to boost its reserves. Government bonds fell, lifting the yield to the highest in a week before the Finance Ministry auctions 15 billion rubles of bonds Wednesday.

U.S. Fed Chair Janet Yellen may provide further clues on plans for increasing interest rates at a press conference Wednesday after a two-day meeting. Russian bonds are retreating after the central bank warned of inflationary risks on Monday as it delivered its smallest interest-rate cut since March.

“Investors are buying foreign currencies before the Fed meeting,” Alexei Egorov, an analyst at PAO Promsvyazbank in Moscow, said by phone. “Many are expecting monetary policy tightening, which would make riskier assets less attractive.”

Five-year government bonds retreated for a fifth day, increasing the yield one basis point to 11.19 percent. The Finance Ministry is due to offer 5 billion rubles of fixed- coupon bonds due in January 2028 and 10 billion rubles of January 2025 floating-rate notes.

“I think there’ll be demand at today’s auction,” Dmitry Polevoy, the chief economist at ING Groep NV in Moscow, said by e-mail. “The floaters are still interesting against the backdrop of the central bank’s rate cuts.”

The Micex stock index rose 0.4 percent to 1,674.58, the third day of gains. The dollar-denominated RTS Index dropped 0.2 percent to 975.93.