Ruble Gains for 3rd Day on Bets Russia Sanction Impact Limited
By Ksenia Galouchko and Vladimir Kuznetsov Mar 19, 2014 11:46 AM ET
The ruble strengthened for a third day as Russia pushed on with its annexation of Crimea and investors wagered the impact of Western sanctions will be mild. Stocks slumped after two days of gains.
The currency climbed 0.8 percent to 42.2596 against Bank Rossii’s target basket of dollars and euros by 6 p.m. in Moscow, when the central bank stops its market operations, extending its three-day increase to 1.9 percent. The Micex Index (INDEXCF), which slid into a bear market last week, dropped 1.3 percent to 1,319.02 by the close, snapping the biggest two-day advance since May 2010.
U.S. and European Union sanctions against Russia have so far been limited to visa restrictions and asset freezes against several officials. Markets rallied as President Vladimir Putin told lawmakers yesterday there were no plans to further divide Ukraine, before signing an accord to admit Ukraine’s breakaway Crimean peninsula to the Russian Federation. Russian companies, including large exporters of commodities, will pay value-added tax tomorrow and mineral-extraction taxes on March 25.
“The relief rally continues, supported by the tax period,” Dmitry Dorofeev, a money manager at BCS Financial Group in Moscow, said in e-mailed comments. “The question is how long it will last.”
The ruble rally may come under pressure if the Finance Ministry returns with purchases of foreign currency for the Reserve Fund as the ruble strengthens beyond 36 per dollar, Maxim Korovin and Anton Nikitin, analysts at ZAO VTB Capital in Moscow, said in an e-mailed note.
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http://www.bloomberg.com/news/2014-03-19/ruble-gains-for-3rd-day-on-bets-russia-sanction-impact-limited.html
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