Ruble Extends its Rally as Local Firms Offload Foreign Currency Assets

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Ruble Extends its Rally as Local Firms Offload Foreign Currency Assets The ruble extended its gains for the second day on bets that companies were offloading their foreign currency assets over fears of looming sanctions against Moscow over Ukraine crisis.

The Russian currency gained 0.1 percent to 41.9236 versus a target basket of euros and dollars compiled by the local central bank. The yield on ruble-denominated sovereign bonds that expire on February 2027 plunged seven basis points to 9.54 percent.

The ruble has declined 7.8 percent against the dollar in 2014, making it’s the second-poorest performing of the 24 emerging-economy currencies tracked by Bloomberg. The currency rose 0.2 percent to 35.6420 per dollar and plunged 0.1 percent to 49.6105 per euro.

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“Now is a good time for Russian companies to sell dollar assets as new sanctions can be enacted at any moment, with Ukraine’s presidential elections day approaching,” Vladimir Miklashevsky, An Helsinki-based strategist at Danske Bank A/S emailed Bloomberg.

Russian households and firms purchased a net of $19.6 billion worth of foreign currency equivalent in the first three months of 2014, the largest amount since the last quarter of 2008, reported the central bank flash figure of Russia’s balance of payments.

The Finance Ministry has no plans to conduct debt sales this week. The next debt auctions will be held on May 14. Moscow’s financial markets will shut down on May 9 for a national holiday.

“I wouldn’t overdramatize the move in bonds because of the low liquidity in most issues,” Leonid Ignatyev, a Moscow-based head of fixed-income research at BCS Financial Group, told Bloomberg. “Activity has declined very significantly because of the holidays.”

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