Bank of Russia opts for 'verbal intervention' to halt ruble rout
Russia's central bank said corporate debt repayments this year won't overwhelm the foreign- exchange market with "excessive demand," seeking to inject calm as the ruble tumbled the most among developing nations on Monday.
Companies and lenders have to repay as much as $35 billion out of the $61 billion in foreign debt that falls due from September to December, the central bank said in a statement on its website. The rest may be rolled over or refinanced because some of it is owed to affiliated companies, it said. Policy makers are trying to avert another ruble collapse after foreign debt repayments by companies last year helped spark Russia's worst currency crisis since 1998. With a renewed slide in commodity prices hammering the ruble, the central bank last month halted foreign-currency purchases to boost its reserves.
"It's verbal intervention aimed at stabilizing market sentiment regarding the ruble," Dmitry Dolgin, an economist at Alfa Bank in Moscow, said by e-mail. "There are concerns on the market that the looming repayment of external debt will exert significant pressure on the balance of currency demand and supply on the domestic market, especially under the conditions of falling oil prices." The ruble fell for a fourth day, depreciating 0.5 percent to 64.37 versus the dollar at 1:04 p.m. in Moscow, its weakest level on a closing basis since Jan. 28. The drop was the steepest on Monday among 24 emerging-market currencies tracked by Bloomberg.
The Russian government's fiveyear bonds dropped, pushing the yield up three basis points to 11.13 percent, while the Micex index of stocks declined 0.4 percent. Lenders and companies have accumulated about $135 billion in liquid foreign assets, according to the central bank. The nation's current-account surplus, which may also help finance debt repayments, is estimated at about $20 billion with oil at $40 a barrel, it said in the statement.
The Bank of Russia also has about $14 billion available in foreign-currency repurchase facilities from its $50 billion program unveiled last year. The share of "intra-group liabilities," or money owed to affiliated companies, is estimated at 74 percent of all external debt repayments in September, 59 percent in October, 8 percent in November and 48 percent in December, according to the central bank.
The regulator cited its survey of the 30 biggest Russian companies that account for as much as 60 percent of total repayments by non-financial organizations through the rest of 2015.
The central bank's comments "will partially support the ruble, but will appeal mainly to the most emotional, speculatively biased investors," said Denis Davydov, an analyst at Nordea Bank AB in Moscow. "The most vulnerable issue for the market is the price of oil."