Russia’s ruble led gains in emerging markets after Interfax reported the nation’s talks with Saudi Arabia resulted in a consensus on oil output, pushing the currency of the world’s biggest energy exporter to the highest level in more than four months.
The currency strengthened 1.3 percent to 65.936 per dollar by 6:12 p.m. in Moscow, the highest level since Nov. 26. Brent crude, used as a benchmark for Russia’s main export variety, rose 2.2 percent in London to $43.79 per barrel, up 57 percent from a 13-year low on Jan. 20.
The ruble extended gains after the Interfax report, which cited an unidentified “informed diplomatic source” in Doha, where oil producers will meet on April 17 to discuss capping production. Russian Energy Minister Alexander Novak said Tuesday the agreement had the potential to rebalance prices and push crude to $50 a barrel by the end of 2016.
"Everybody’s waiting for Doha, and it looks like globally people stopped believing in the dollar’s strengthening," Dmitry Polevoy, the chief economist for Russia at ING Groep NV in Moscow, said by e-mail. "Technically oil may test $45-$47 levels, which will bring the ruble to 63-64 per dollar."
ING and Goldman Sachs Group Inc. predicted the ruble would extend gains of 12 percent against the dollar this year as recovering oil prices boost the amount of money Russia generates per barrel for the state budget to the highest level in a month.
Budget Revenue
The price of a barrel of crude in ruble terms rose 2 percent on Tuesday to 2,917, the highest level in a month and up 30 percent from a record low on Jan. 15. That’s still about 9 percent under the 3,165 level lawmakers had planned on to fund the 2016 budget with a deficit of 3 percent of gross domestic product.
Russia’s net capital outflow declined 79 percent in the first quarter to $7 billion, the smallest outflows since 2007, central bank balance of payments data showed on Tuesday.
The low capital outflow numbers may support the ruble, helping it outperform comparative gains in the price of oil, Goldman analysts Clemens Grafe and Andrew Matheny said in a note to clients.
"Barring a scenario of big external-driven shocks, we don’t see any significant risks for the ruble from the balance of payments side in the coming months and quarters," Polevoy said.
Russian local-currency government debt rose, pushing the yield on 10-year bonds down one basis point to 9.25 percent. The Micex Index of shares trimmed losses to 0.1 percent.
original source: http://www.bloomberg.com/news/articles/2016-04-12/russian-ruble-rises-to-four-month-high-as-brent-extends-rally