High Oil Prices, Risk Appetite Drive Ruble, Stocks Up

The Russian ruble and stocks continued their rally on Monday as Europe’s stimulus expectations and strong U.S. labor data pushed up world oil prices and increased investor appetite for risk, traders said.

As of 15:25 p.m. Moscow time (11:25 GMT), the ruble strengthened by 16 kopecks against the dollar to 31.85 and by 12 kopecks against the euro to 39.35. The ruble-denominated MICEX stock index was up 1.65 percent to 1,444.76 points and the dollar-denominated RTS surged by 2.21 percent to 1,429.22.

The dollar plunged below the psychologically important level of 32 rubles on Friday, hitting a two-month low.

Global markets were cheered by strong U.S. labor data on Friday which showed an increase in non-farm payrolls by 163,000 jobs in July, far above analysts’ expectations, even though the unemployment rate stood at 8.3 percent compared with 8.2 percent in June.

International oil prices are hovering at about $107 per barrel and may come close to the $100 per barrel mark while the euro is gaining against the greenback, suggesting demand for risky assets, analysts said.

“The expectation of specific measures by the ECB [European Central Bank] to stabilize the debt market in Europe and the unexpectedly good labor data in the United States are supporting optimistic sentiments on the market. The euro/dollar rate has risen to 1.2440,” Globex Bank senior trader Igor Zelentsov said.

Investment in funds focused on Russia, which has enjoyed a record capital inflow in the past few weeks, is another major driver for the ruble growth, BCS Express expert Valery Dmitriyev said.

“Russia owes this result [an inflow of $248 million] to a Credit Suisse fund, which has contributed 80 percent of the capital,” he said.

 

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