The ruble on Monday strengthened to the highest level against the dollar this month and Russia’s dollar bonds climbed as oil topped $78 a barrel on China’s decision to relax the yuan’s fixed rate to the greenback.
The ruble added 0.8 percent to 30.77 per dollar in Moscow trading, the strongest close since May 28. It advanced 0.7 percent to 38.10 per euro. The gain in Russia’s benchmark dollar bonds due 2020 pushed the yield down 10 basis points to 5.312 percent, the lowest since May 3, according to Bloomberg prices.
Crude oil rose as much as 2.2 percent to $78.87 a barrel in New York, the highest intraday price since May 6. The People’s Bank of China said it might allow the yuan to move higher, indicating that it is abandoning the 6.83 yuan peg to the dollar adopted during the global financial crisis to shield exporters.
“Key for Russia is that this move by the Central Bank boosts demand for commodities and for countries that sell products into China,” said Tom Mundy, a strategist at Renaissance Capital. The move “definitely supports risk assets,” he said. ?
The movements against the dollar and the euro left the ruble at 34.07, the strongest since May 28, against the Central Bank’s target currency basket, which it uses to manage swings that hurt Russian exporters.
The country’s five-year dollar bonds rose, pushing the yield down 10 basis points to 4.236 percent, the lowest since May 18.