The currency market this week was dominated by a stronger ruble. The dollar lost 14 kopecks, falling to 30.43 rubles to the dollar. The dollar’s poor performance on the world’s currency market brought about the fall. The ruble was further strengthened by banks’ low liquidity. The short-term IBC rate after a brief decline returned to the 8.9%-11.3% range, while correspondent accounts fluctuated around the 100-billion-ruble mark. “More likely than not, ruble resources will become as expensive as before, which should cause the exchange rate to fall to 30.30 rubles to the dollar. Further developments will depend entirely on the ruble supply and the Central Bank’s position,” believes Roman Kozlov, Director of the Interbank Operations Division at Rosprombank.
The market for federal ruble bonds is stagnating. Over the course of the week, quotes moved in different directions, but generally fell. The tense atmosphere regarding ruble liquidity did not encourage much investor activity, but there were also no major sales of government bonds.
The big event on the sub-federal and corporate bond markets this past week was the auction to place the 4-billion-ruble 30^th series of Moscow municipal bonds. Investors bought up 3.3 billion rubles worth with a yield set at 11.5% p.a., which considering the limited ruble supply meant a fairly strong showing for the bonds. According to Anastasia Shamina, an analyst at Zenit Bank, investors demonstrated their willingness to buy at current yield levels, which could mean the beginning of an upward correction in bonds at the beginning of October. Another piece of evidence supporting this prediction is the limited corporate bonds up for sale. Despite the fact that interest rates on the money market have reached 20% p.a., prices in the corporate segment of the market changed only insignificantly.
Eurobond prices fell for the greater part of the week. The decision to restructure Argentina’s foreign debt and the downward trend in US bonds were to blame. At the end of the week, Russian foreign securities saw a correction, though they didn’t succeed in making up for what they had lost. “After the unexpected decision by OPEC to reduce production quotas and raise prices, quotes for Russian bonds went up,” noted Alexander Kudrin, a debt securities analyst at IK Troika Dialogue. “It is likely that in the near future, prices will stay at approximately the same level, and the same close correlation between Russian and American bonds will continue.”
Norilsk Nickel remained the fastest growing stock on the Russian stock market this week. High metal prices meant an increase in 9.6% for the company. Almost every oil and natural gas blue chip also ended up ahead. “The announcement by German Gref, the Minister of Economic Development, regarding the possible liberalization of the market for Gazprom stock in 2004 led to a dramatic growth in stock prices for the natural gas monopoly. LUKoil shares also shot up thanks to the announcement that the company was preparing to be listed on the New York Stock Exchange,” explains Yuri Makeyev, analyst at IT Invest. Sibneft shares went up noticeably, gaining 3.5% and approaching the YUKOS’ offering price. Among the losers this week were Tatneft and Sberbank, which lost 3.8% and 3.3% respectively.

The Financier’s Date Book

October 2 PIT Investments places 1 billion rubles in bonds

October 7 Samara Province places 2.37 billion rubles in bonds

October 10 TV-3 places 0.75 billion rubles in bonds

October 8 Duma’s second reading of the Law on Insurance

November 30 Uralsvyazinform releases its results for the first nine months of 2003 according to the Russian Accounting Standard