Volatile ruble reduces intraday losses as Russia falls into default zone According to Reuters
© Reuters. FILE PHOTO: An illustration shows Russian ruble banknotes in multiple denominations on a table in Warsaw, Poland, January 22, 2016. REUTERS / Kacper Pempel
MOSCOW (Reuters) – The ruble offset initial losses in volatile trade in Moscow on Monday as Russia threatened its first sovereign default in more than a century after a payment period expired. and the West promised more action against Moscow in the Ukraine conflict.
The 30-day grace period for bondholders to receive $100 million in interest payments due on May 27 expired on Sunday. The Kremlin denied the default on Monday, while the Russian Finance Ministry blamed Western operators.
Russia has long said it has money to pay, a so-called default because sanctions prevent foreign bondholders from receiving cash.
At 1107 GMT, the ruble was 0.3% stronger against the dollar at 53.23, paring losses, having previously dropped as much as 2% to hit its weakest since June 21 at 54.4975 .
The ruble will likely remain in the 50-55 range against the dollar in the coming weeks and could test the lower boundary of that range, Dmitry Polevoy, head of investments at Locko Invest said in one note.
The ruble gained 0.2% to trade at 55.96 against the euro, also helping to reduce initial losses that had fallen to 57.3375.
The ruble has been by far the world’s best performing currency this year, as Russia gains a lot of money from commodity exports, reduced imports and a ban on households withdrawing foreign currency savings.
The strong ruble chokes the earnings of export-focused companies and could weigh on the economy as the country slips into recession following harsh sanctions on what Moscow calls “military activity”. special” in Ukraine.
On Tuesday, a senior US official said the Group of Seven rich democracies would commit to a new package of coordinated actions to put pressure on Russia over the conflict in Ukraine, a senior US official said. US said on Monday, which analysts say could put downward pressure on the currency.
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Capital controls have boosted the ruble for months, pushing it to a seven-year high on June 22.
The peak of the month-end tax period this week that saw export companies convert dollar and euro revenue into rubles could add short-term support.
Alor Broker said in a note there was no increase in currency sales by exporters last week, meaning they may have left the forex transition until the last minute, which would saw the ruble strengthen.
However, Alor said exporters may have stockpiled the required amount of rubles.
In the bond market, the yield on 10-year benchmark OFZ bonds, inversely proportional to their price, fell to 8.63%, the lowest since early 2022.
Russian stock indexes are more stable.
The RTS in dollar terms rose 0.7% to 1,424.4 points. The ruble-based Russian MOEX index was 0.6% higher at 2,406.7 points.
