Ruble Strengthens on Talk Of Reduction in Outflows

The ruble posted a second weekly gain versus the dollar-euro basket Friday amid speculation that fewer funds were leaving the country after the government pledged to bail out the market.

The MICEX Index had its smallest weekly decline since June after the country said it would provide more than $100 billion in emergency funding to support equities and reduce borrowing costs as the U.S. government sought approval of its rescue plan for its banks.

The ruble has lost 3.5 percent versus the basket since the start of August as the war with Georgia and global financial turmoil spurred a flight of capital, estimated at about $47 billion by UniCredit.

"Capital outflow probably slowed, and there may have even been some inflows after the combination of the liquidity infusions and the U.S. bailout" proposal, said Vladimir Osakovsky, an economist at UniCredit. "This stability should have provided support to the ruble basket."

The managed currency was at 30.26 to the basket Friday evening in Moscow, from 30.24 late Thursday. The ruble is 0.4 percent higher since Sept. 19, the biggest weekly advance since a 0.5 percent increase in the period ending Aug. 22. The Central Bank keeps the ruble within a trading band against the basket of 55 cents and 45 euro cents, limiting the effect of fluctuations on the competitiveness of Russian exporters.

The ruble was little changed at 25.03 per dollar and was headed for a 1 percent increase over the past five days. The currency weakened to 36.64 per euro, from 36.59 on Thursday, and is 0.2 percent lower since Sept. 19.