RUSSIA: Ruble Jumps as Russia Returns From Holidays

January 12, 2010

By ANDREW E. KRAMER

MOSCOW — The ruble had its best day against the dollar in more than a decade on Monday when it rose 3.1 percent.

The jump was partly a result of a fluke in Russia’s trading calendar that closed the markets for 10 days, bottling up beginning-of-the-year trends unfolding elsewhere and allowing them to hit at once.

Russian markets were closed after the New Year for Eastern Orthodox Christmas. During that time, oil prices rose above $80 a barrel because of cold weather, a weakening dollar and signs of growth in China.

Thus, when markets opened, the ruble went from 30.25 rubles to the dollar at the opening to 29.25 at the close. That was the biggest jump for Russia’s currency since March 1999, when the country was pulling out of an economic crisis, according to Bloomberg News.

The Micex index of major Russian stocks, meanwhile, rose 5.5 percent. The gas giant Gazprom, a company that is sensitive to oil prices, rose 6.23 percent. Norilsk Nickel, the Siberian miner of this alloy of stainless steel, gained 10.61 percent. Rosneft, the state oil company, rose 7.80 percent. The gains were less marked in light of the unusual trading schedule. Russian global depository receipts that trade in London, where the market was open all week, had risen to 5.7 percent by Friday.

That was more than the 2.7 percent gain by the MSCI Emerging Markets Index of all emerging market stocks, suggesting pent-up interest in Russia.

“The Russian markets today were just catching up with everything that happened when they were on vacation,” Rory MacFarquhar, chief economist at Goldman Sachs in Moscow, said in a telephone interview. Still, Goldman is expecting further ruble appreciation.

The appreciating currency is an added benefit for investors in Russian stocks. The currency and equity markets then tend to spiral upward together with rising commodity prices but crash just as hard when the tide turns, as it did in 2008.

Still, even accounting for that crash, Russia’s gross domestic product grew the most of any major economy in dollar terms over the last decade, followed by Indonesia and Vietnam, according to a report released last week by Goldman Sachs.

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