Ruble Stays Lower as Russia Bonds Slide After Rate Increase
Bloomberg News
The ruble stayed lower, extending the worst month in more than two years, and bonds slid after the central bank raised the key interest rate by a higher-than-forecast 150 basis points.
The Russian currency temporarily trimmed its drop against the central bank's dollar-euro basket before trading 1.2 percent lower at 47.0459 as of 1:42 p.m. in Moscow. It surged 4 percent yesterday, the largest increase since at least 2003, on optimism the central bank will take steps to stabilize the currency and ward off speculators.
The Bank of Russia increased the key rate to 9.5 percent, compared with an 8.5 percent median estimate in a Bloomberg survey of economists. The biggest bets were for a move to 9 percent. The yield on the government's ruble-denominated bond due February 2027 jumped 19 basis points to 10.10 percent, taking this month's increase to 79 basis points.
'The rate hike should help decrease the pressure on the ruble, but doesn't eliminate the key reason for the RUB weakening, which is the shortage of supply of FX in the market,' said Tatiana Orlova, the chief economist for Russia at the Royal Bank of Scotland Group Plc in London. 'The weakening may resume early next week.'
To contact the reporters on this story: Vladimir Kuznetsov in Moscow at vkuznetsov2@bloomberg.net; Natasha Doff in London at ndoff@bloomberg.net
To contact the editors responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net Daliah Merzaban, Stephen Kirkland
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