The Russian ruble’s foreign exchange rate strengthened against the US dollar and bond yields fell to a six month low as Iranian oil disruptions spurred demand for Urals crude, Russia’s chief export earner.
The Russian ruble appreciated 0.4 percent to 29.68 per US dollar at 7 p.m. in Moscow, its strongest closing level since Sept. 8. The yield on Russia’s $2 billion of Eurobonds due 2015 dropped nine basis points, or 0.09 percentage point, to 2.567 percent, the lowest level since Aug. 4.
Urals crude rose 0.3 percent to $121.48 a barrel, the highest since April 29, after the Middle East’s second-biggest oil producer denied United Nations inspectors access to a suspected nuclear site, raising concern that tensions between the Persian Gulf nation and Western countries may escalate. Prices for the commodity will probably “spike” higher, David Greely, head of energy research at Goldman Sachs Group Inc. in New York, wrote in a report today.
“Taxes and the high oil price” are driving the ruble’s gains, Sergey Ponomarev, head of foreign exchange at Moscow Bank for Reconstruction and Development in Moscow, said by email. The lender expects crude prices to remain elevated, he said.
Russian companies pay taxes in the second half of every month. Exporters convert revenues from abroad into rubles, boosting demand for the Russian currency.
“Should the oil price spike up as a result of a breakout of a geopolitical crisis in the Middle East, we think that the ruble would be well positioned to rally,” Benoit Anne, head of emerging-markets strategy at Societe Generale SA in London, wrote in an e-mailed note to clients. “Some simple chart evidence suggests that while the ruble and the oil price enjoy a strong relationship, the ruble has actually lagged the oil-price rally lately, which may indicate that some catching-up is overdue.”
Urals has climbed 9.7 percent so far this month, while the ruble has appreciated 1.7 percent against the dollar. Brazil’s real climbed 2.1 percent over the same period, India’s rupee strengthened 0.8 percent and China’s yuan gained 0.2 percent.
The ruble was 0.5 percent stronger at 39.2526 per euro and 33.9877 against the central bank’s target dollar-euro basket.
Investors pared bets the Russian ruble would weaken, with non-deliverable forwards showing it at 30.0295 per US dollar in three months time, compared with expectations of 30.1223 per dollar yesterday.