Ruble Appreciates Due to Dividend Payments and Foreign Investor Demand

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Ruble Appreciates Due to Dividend Payments and Foreign Investor Demand The ruble surged to the strongest level this month as companies sought to pay dividends and demand from foreign investors participating in a government bonds auction.

The ruble advanced 0.5 percent to trade at 34.0595 per dollar as of 11:32 a.m. in Russia local time, surpassing the 200-day moving average. Yield on ruble-denominated debt that matures on February 2027 plunged 1 basis point to 8.52 percent.

The ruble also rose 0.5 percent to 46.3750 versus the euro and also by the same margin against the central bank’s target basket of euros and dollars to 39.6031 on Wednesday.

“The demand for the ruble may be due to currency selling by the largest Russian companies, accumulating rubles for dividend payments,” Dmitry Polevoy, a Moscow-based chief economist for Russia and CIS at ING Groep NV told Bloomberg. “Another possible reason is the participation by foreigners in today’s auction.”

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Russian firms, such as energy exporters which earn revenue mostly in dollars, have paid 25 percent of their total dividends and are expected to convert $5 billion to $6 billion in the final week of July, according to analysts at VTB Capital. The Finance Ministry placed 10 billion rubles worth of OFZ bonds that mature in May 2020 for sale in an auction today.

The New Zealand dollar surged close to its highest level in three years on speculation that the country’s sovereign credit rating may be upgraded. The U.S. dollar also remained steady as the market awaited the minutes of the Federal Reserve’s June meeting. The dollar was trading at 80.161 versus a basket of major currencies, compared with the one-and-half week high of 80.359 touched early this week. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com