Ru­ble hits two-month high ver­sus Euro on debt woes in Rus­sia

The Pak Banker - - Company& -

MOSCOW: The ru­ble climbed to its strong­est level against the euro in two months as the prospect of higher in­ter­est rates and a wors­en­ing of Europe's debt cri­sis lured in­vestors to the world's largest en­ergy ex­porter.

Rus­sia's cur­rency added as much as 0.9 per­cent to 40.79 per euro, its strong­est in­tra­day level since Sept. 21. It weak­ened 0.2 per­cent to 31.4050 per dol­lar by 1:23 p.m. in Moscow, af­ter ear­lier gain­ing to 31.2775.

Bank Ros­sii may raise its record-low bench­mark bor­row­ing costs by 1.31 per­cent­age points over the next six months, ac­cord­ing to for­ward rate agree­ments tracked by Bloomberg, af­ter the cen­tral bank's First Deputy Chair­man Alexei Ulyukayev yes­ter­day in­di­cated key rates may rise over the com­ing months. The euro slumped against most of the 25 emerg­ing-mar­ket cur­ren­cies tracked by Bloomberg to­day amid spec­u­la­tion Ire­land's bailout for its deb­trid­den bank­ing sec­tor may have to be ex­panded to other Euro­pean na­tions.

"All this spec­u­la­tion about Europe is weigh­ing on the euro and peo­ple are sell­ing it against al­most ev­ery­thing, in­clud­ing the ru­ble," Ivan Tchakarov, chief econ­o­mist for Rus­sia and the for­mer Soviet Union at BofA Mer­rill Lynch Global Re­search, said by phone in Moscow. "The sub­tle change in rates out­look is also a mar­ginal driver" of the cur­rency, he said.

The ru­ble strength­ened for a sec­ond day against the dol­lareuro bas­ket used by Bank Ros­sii to tem­per swings in the cur­rency that dis­ad­van­tage ex­porters. It gained 0.3 per­cent to 35.6551 ver­sus the bas­ket, which is made up of about 55 per­cent dol­lars and 45 per­cent eu­ros.

In­vestor con­cern has shifted to Spain and Por­tu­gal since Ire­land was of­fered an 85 bil­lioneuro ($111 bil­lion) bailout pack­age by the Euro­pean Union and In­ter­na­tional Mon­e­tary Fund. Span­ish 10-year dol­lar debt has slid for the past 11 days, push­ing the yield to a 10-year high. Por­tuguese 10-year bonds yielded the most since at least 1997 to­day. The euro hit a two-month low against the dol­lar.

Bank Ros­sii didn't in­clude the "for the com­ing months" qual­i­fier it has in­cluded in pre­vi­ous an­nounce­ments in its state­ment Nov. 26 an­nounc­ing key in­ter­est rates would re­main on hold for the fifth straight month. This omis­sion shows the Moscow-based reg­u­la­tor now "has a free hand" when it comes to bor­row­ing costs and "isn't con­fi­dent" rates will re­main on hold in the months to come, Ulyukayev said at a con­fer­ence in Mu­nich, ac­cord­ing to the RIA Novosti news ser­vice.

Bank Ros­sii may raise rates to curb in­fla­tion as soon as next month, Vladimir Osakovsky, chief Rus­sia econ­o­mist in Moscow at Uni­Credit SpA, said in a re­search note emailed yes­ter­day. Higher rates would bol­ster Rus­sia's ap­peal as a des­ti­na­tion for the carry trade, where in­vestors bor­row funds in coun­tries with lower rates of in­ter­est and in­vest them in places where the re­turns are higher. -PB News

IS­LAM­ABAD: Am­bas­sador of Turkey called on Fed­eral Min­is­ter for Ed­u­ca­tion Sar­dar Aeff Ah­mad Ali. -App

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