Ruble Appreciates Ahead of Russia’s Tax Season

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Ruble Appreciates Ahead of Russia’s Tax SeasonThe ruble rose the second day as the tax season approaches, spurring demand for the ruble, while oil prices rebounded.

The Russian currency appreciated 0.8 percent to trade at 46.75 per dollar as of 1:32 p.m. Moscow time. The yields on the 10-year government bonds plunged after hitting a five-year high, falling eight basis points or 0.08 percentage points to 10.27 percent. The prices of the Brent crude rose 0.5 percent to $79.73 after earlier dropping 0.6 percent.

The OAO Bank Zenit expects Russian firms to pay taxes worth about 700 billion rubles ($15 billion) between Nov. 20 and Nov. 28.

The bearish crude oil market has affected Russia’s finances, since the country relies on oil and gas proceeds to finance half of its budget. Russia has also been hit hard by sanctions imposed by Western governments, which have caused foreign currency shortages and triggered massive capital outflows.

The ruble has lost 30 percent of its value this year, making it the biggest loser worldwide after the Ukrainian hryvnia.

Meanwhile, the Brazilian real rebounded from its weakest level in nine years after German business confidence rose and Japan postponed a scheduled sales tax hike, fuelling demand for emerging market assets.

The real rose 0.5 percent to trade at 2.5963 per dollar as of 1:24 p.m. Sao Paulo time, reported Bloomberg News. Swap rates, which measure the forecasts of shifts in interest rates, plunged 0.03 percentage point to 12.73 percent for the contract that matures in January 2017.

In order to boost the real, Brazil’s central bank auctioned foreign exchange swaps valued at $196.3 million and rolled over $677 million worth of contracts. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Yashu Gola at yashu@forexminute.com