The rouble rallied the most since 1998 and shares of Russia's largest bank jumped 29 per cent in London as the government sold dollars and the central bank said it will help companies meet foreign-currency debt obligations.
The currency gained 11 per cent to 60.7495 a dollar, ending a seven-day, 22 per cent drop. The Bank of Russia said lenders won't have to write down the value of assets affected by the weaker rouble and falling bonds, allowing banks to use the third-quarter exchange rate in valuing risk-weighted assets. Shares of OAO Sberbank (SBER), the nation's largest lender, rose the most on record in London and its bonds rallied.
The central bank measures, which also include the provision of foreign-exchange loans and additional repurchase auctions, come after the Finance Ministry bought roubles today to arrest the worst depreciation since 1998. Russian markets went into freefall yesterday as a surprise interest-rate increase failed to shore up investor confidence. Today's advance trims the rouble's slide this year to 45 per cent.
"Authorities made a combined effort, giving strong signals to the market that they are doing anything it takes to stem the rouble rout and turn things around," Bernd Berg, a London-based emerging-market strategist at Societe Generale SA, said in e-mailed comments. "As a result the rouble is gaining strongly."
Banks and companies in the country face about $20.3 billion in non-rouble loan and debt repayments before the end of March, according to data compiled by Bloomberg.
Russian lenders and companies are concerned about coming foreign-currency debt payments, central bank First Deputy Governor Ksenia Yudaeva said in an e-mailed statement today. The measures are intended to balance supply and demand to help stabilise the rouble rate as soon as possible, she said.
The dollar-denominated RTS Index of shares jumped 14 per cent, the most since 2008. Sberbank's stock traded in Moscow added 12 per cent, while the yield on its Eurobonds maturing in February 2024 decreased 3.2 per centage points to 11.07 per cent.
The gains may enable President Vladimir Putin to continue to strike a confrontational stance as he holds his annual news conference tomorrow. Brent crude rebounded in London today, surging 4.8 per cent. Russia gets about half its budget revenue from the proceeds of oil and gas sales.
The rouble remains 46 per cent weaker this year and derivatives traders remain the most bearish on the currency in five years, according to three-month risk-reversal data on Bloomberg.
Depositary receipts of Sberbank were at an 11 per cent premium to the equivalent Moscow-traded security today as some investors brace for Putin's government to implement capital controls if other measures to stop the rouble's slide fail. Economy Minister Alexei Ulyukayev said Russia wasn't considering implementing restrictions as the currency plummeted as much as 20 per cent to a record 80.10 a dollar.
"At this stage it is too early to judge if the rouble is out of the woods, Piotr Matys, London-based emerging-market foreign-exchange strategist at Rabobank International, said. "Odds for a full-blown financial crisis increased markedly after the drastic monetary policy tightening announced on Monday night failed to stabilise the rouble."
The central bank has spent $10 billion in foreign exchange this month and raised the key interest rate by 7.5 per centage points as it sought to stabilize the rouble. The Bank of Russia said two days ago it will boost the limit on 28-day foreign-exchange repurchase auctions to $5 billion from $1.5 billion.
Policy makers will probably need to spend another $70 billion to stem the rouble's slide, according to a survey of economists.
The rouble may strengthen to 55 a dollar in the coming days and is unlikely to weaken to 80 again over next three months, Riccardo Barbieri Hermitte, the chief European economist at Mizuho International Plc, said by e-mail. "The rouble is way too weak, given its recent correlation with oil prices," he said.