The ruble accelerated the most in at least three weeks after Russian President Vladimir Putin met with U.S. President Barack Obama and Ukrainian President-elect Petro Poroshenko in France, fuelling speculation that the current political tensions will dissipate.
The ruble rose 0.8 percent, the fastest pace since May 13, to stand at 40.1062 versus the central bank’s basket of euros and dollars at the close of trading in Moscow. The Russian currency rose 0.8 percent to close at 34.4700 versus the US dollar and strengthened 0.9 percent to 46.9850 per euro. The ruble has advanced 1.3 percent this week.
“The political premium is shrinking, investors are buying back all the Russian assets, ruble, rates and bonds included,” Dmitry Dorofeev, a fund manager at BCS Financial Group, was quoted by Bloomberg. “On top of that there was some short-covering from people who bet on the rally in the ruble and the bonds coming to a close because they’ve got more expensive.
Russia’s Micex Index of shares grew 1 percent, bringing its total advance since March to 20 percent. On March 3, the Russian parliament approved a measure that allowed Putin to employ force in Ukraine, sending local shares and the ruble on a downward spiral.
The central bank hiked the key rate by 50 basis points to April to 7.5 percent, bringing the cumulative increases to 200 basis points since the Russian invasion of Crimea started. Economists in a Bloomberg survey forecast the country’s economy, which is currently on a rough patch, to grow by 0.65 percent in 2014. Russia’s inflation rose to 7.5 percent in April, the most since August 2011. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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