Ruble May Gain as Putin Uses Clout in Oil, Gas to Boost Exports

The ruble rally shows no sign of abating as President Vladimir Putin continues to exploit Europe’s dependence on Russian energy with a policy of ever-rising natural-gas prices.

“Russia has a big weapon in the form of energy,” said Lars Rasmussen, an analyst at Danske Bank A/S in Copenhagen who covers the former Soviet states. “They intend to use it to extract higher revenues from their neighbors. This is very positive for the ruble.”
The currency may gain about 5 percent against the dollar this year, according to Goldman Sachs Group Inc., the world’s most profitable securities firm. That’s on top of a 9.2 percent advance in 2006, when Russia’s trade surplus expanded to a record on surging fuel exports.

Russia, the world’s biggest energy producer, provides almost half of Germany’s natural gas and almost all the gas used by Finland, Greece and Bulgaria and former Soviet states such as Belarus and Lithuania. Russia’s plans to charge its neighbors higher gas prices may extend economic growth and boost the ruble even as oil prices decline on world markets.

The government forecasts growth of 6.2 percent in 2007.

Bloomberg