Ruble Posts Gains for A 2nd Day

MTA man walking past a currency exchange office in Moscow on Wednesday.
The ruble climbed for a second straight day against the dollar as seven central banks around the world cut interest rates to calm the turmoil in financial markets, reviving sentiment toward emerging market assets.

The ruble has slumped 11 percent since the beginning of August.

"These coordinated rate cuts recognize the seriousness of what we're facing," said Eugene Belin, head of fixed income, currencies and commodities in Moscow for Citigroup. "The ruble bounced against the dollar because this is being viewed as positive for emerging markets and for all growth."

The ruble rose to as high as 26.02 per dollar Wednesday and was at 26.06 by 3:58 p.m., up from 26.17 late Tuesday. The ruble weakened against the euro for a second straight day, falling to 35.71 per euro, from 35.56.

"We will probably see some sort of bounce in the Russian market" once the indexes reopen Oct. 10, Belin said. "It shows that authorities worldwide are now in sync with the market's reaction."

The ruble was little changed at 30.40 against the basket Wednesday, down from 30.3983 Tuesday. The level 30.40 is what banks including BNP Paribas, UniCredit, Credit Suisse and ING regard to be the weakest end of the ruble band.

The Central Bank sold about $9.4 billion in the past two days to shore up the ruble, said Mikhail Galkin, head of fixed income and credit research at MDM Bank.

Russia's 7.5 percent government bond due in 2030 fell, pushing the yield 32 basis points higher to 7.79 percent. The 8.25 percent bond due in 2010 advanced, sending the yield 8 basis points lower to 5.43 percent.

n The Central Bank allowed all lenders to borrow money through its repurchase auctions, Interfax reported, citing the regulator's newsletter.

Only banks rated as "financially stable credit organizations" by the Central Bank could participate in the so-called repo auctions before Wednesday, Interfax said. Banks borrowed 188.64 billion rubles ($7.23 billion) from the Central Bank in Wednesday's repo auctions, according to the bank's data.