Ruble weakens as oil drop offsets Greek deal

MOSCOW (Bloomberg) -- The ruble weakened for the first time in three days as declining prices for crude, Russia’s main export earner, offset investor optimism after Greece reached a deal with creditors.

The currency retreated 0.4% to 56.67 per dollar by 5:08 p.m. in Moscow, halting a 1.9% gain in the previous two trading sessions. Oil, which along with natural gas accounts for about 50% of Russia’s revenue, retreated 1.3% to $57.44/bbl on speculation a deal on Iran’s nuclear program will boost its exports amid a market glut.

While Greece’s agreement helped buoy eastern European currencies against the euro, the falling oil price dimmed the revenue outlook for the world’s biggest energy exporter. A deal that will see sanctions against Iran lifted could be announced as soon as Monday.

“Oil remains the dominant factor in investors’ perception of the ruble,” Alexei Egorov, an analyst at PAO Promsvyazbank in Moscow, said by phone. “The key driver for the ruble’s weakness is the lower oil price.”

At the same time, Russian companies will need rubles to pay taxes and dividends this month, and the currency may strengthen to 55 against the dollar, according to Promsvyazbank. Corporates are in the process of paying out about 875 billion rubles ($15 billion) in 2014 dividends and still need to raise the equivalent of about $4 billion in rubles, according to Sberbank CIB. Companies must also contribute about 968 billion rubles in taxes between July 27 and July 30, Sberbank said.

“This week, a new tax period begins, which might shift the focus to export selling and give another foothold for the ruble in the near term,” VTB Capital analysts including Maxim Korovin, said in an e-mailed note.

Five-year government notes rose, cutting the yield three basis points to 11.04%, the lowest since June 15. The Micex Index of stocks increased 0.7% to 1,635.07, while the RTS Index added 0.4%.