Russian assets surge on hopes of sanction lifting

By bne IntelliNews February 13, 2015

bne IntelliNews -

 

The Russian ruble surged 2.5% against the dollar on February 13 as hopes grew that Western sanctions on Russia could be lifted after a peace agreement for Ukraine was reached on February 12.

Adding to support for the ruble, oil prices rose to $60 per barrel, marking a 4% price rise for Brent oil during the week.

"Huge rally seen in Russian assets," wrote Tim Ash of Standard Bank. "Investors assuming it is all over – an end to sanctions and geopolitical risks!"

Russia's dollar-denominated RTS exchange index is up 5.54% to 910 points, while the ruble-based MICEX was 1.78% higher at 1,833 points.

Russian sovereign bonds due for redemption in 2030 rose by 4 points since the signing of the Minsk peace accords.

The market may also have been supported by news on February 12 that Russia's largest oil company, state-owned Rosneft, had completed repayment of a $7bn loan, despite being cut off from international capital markets due to the sanctions.

Traders feared that Roseneft might raise rubles on the domestic market and convert them to hard currency, impacting the exchange rate. Many traders believe that a similar Rosneft debt repayment in December caused the ruble to crash 20%, forcing the Russian central bank to hike interest rates to 17% from 10.5%.

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