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Posted on April 27, 2011
The ruble hit a 28-month high versus the dollar as companies sought to pay taxes and investors shunned the greenback on speculation the U.S. will keep rates at a record-low and continue buying bonds.
The currency touched 27.6717 per dollar, the strongest since Dec. 18, 2008, and was up 0.3 percent at 27.7175 per dollar by 12:57 p.m. in Moscow.
Russian companies, including energy exporters which earn revenue in dollars, need to pay 280 billion rubles ($10 billion) of profit taxes this week, according to HSBC Holdings Plc estimates. The dollar is sliding against all but three of the 25 emerging-market currencies tracked by Bloomberg today as traders speculate the Federal Reserve will say it is keeping the benchmark rate at 0.25 percent and continuing quantitative easing at its meeting today.
“Exporters have to sell at the current rate to pay taxes and this explains the ruble’s gains against the basket as well,” Alexander Morozov, chief economist for Russia, Ukraine and Kazakhstan at HSBC in Moscow, said by e-mail. “The dollar is weakening globally.”
The ruble was little changed for a second day versus the euro, trading at 40.7050 per euro from 40.65 late yesterday. It was also steady at 33.5672 versus the dollar-euro basket used by the central bank to manage the currency’s swings, from 33.5796 yesterday.
Bank Rossii buys and sells foreign currency to keep the ruble within a so-called “floating corridor” against the basket that spanned 32.45 to 37.45 as of March 1, according to First Deputy Chairman Alexei Ulyukayev. The basket rate is calculated by multiplying the dollar-ruble rate by 0.55, the euro-ruble rate by 0.45, then adding them together.
The dollar hit a 16-month low versus the euro today and also weakened against all major currencies except for the Japanese yen and South African rand, Bloomberg data showed.
“The Fed’s willingness to stick to its ultra-expansionary monetary policy is the main driver behind dollar weakness,” Carolin Hecht, an emerging-markets currency strategist in Frankfurt at Commerzbank AG, said by e-mail today. Until the Fed “changes its mind, dollar weakness is likely to persist,” she said.
The U.S. cut its target rate to near zero and has undertaken two bond purchasing programs, a tactic known as quantative easing, to help its economy rebound from the global financial crisis. With interest rates in places like Brazil, Poland and Russia as much as 11.75 percentage points higher, investors are being lured to the higher yields at the expense of the dollar, according to Hecht.
The ruble may reach 24 per dollar by the end of this year should oil prices — which have surged 23 percent so far this year — stay around current levels, Deputy Economy Minister Andrei Klepach said in Moscow yesterday. The likelihood of the ruble strengthening to that level is 9.4 percent, implied volatility from options trading monitored by Bloomberg showed today.
Russia’s debut ruble-denominated Eurobond rose for a fifth day, pushing the yield down two basis points to 6.69 percent, the lowest since the bonds started trading March 1.
The government’s dollar debt due 2020 also advanced, leaving the yield one basis point lower at 4.85 percent, a 2 1/2-week low.
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