Dec. 2 (Bloomberg) -- Russia’s ruble may fall as much as 25 percent in the next 12 months as the central bank seeks to conserve foreign-currency reserves amid declining oil prices, Goldman Sachs Group Inc. said.

The New York-based bank increased its depreciation forecast for the ruble against a basket of dollars and euros from 18 percent, Moscow-based economist Rory MacFarquhar said in a note to clients late yesterday.

“Russia would be better off if the central bank were to allow a one-time devaluation in the near term, it would allow the bank to conserve its reserves,” MacFarquhar said. “It would give a competitive boost to exporters, which have been squeezed by falling commodity prices.”

Bank Rossii widened the ruble’s trading band three times last month, allowing it to weaken 3 percent against the basket, as oil prices slid below $50 a barrel. The bank manages the ruble against the basket to minimize the impact of currency swings on Russian exporters. The ruble slumped 13 percent against the dollar this year as the country experiences its worst financial crisis since 1998.

The 3 percent decline came “sooner than we had expected,” and prompted the change in Goldman’s forecast, MacFarquhar said.

Russia’s reserves, the world’s third largest, have plunged by a quarter since the start of August as Bank Rossii sells dollars and euros to arrest the ruble’s drop. The reserves probably fell about $6.25 billion to $443.7 billion last week as policy makers sold $5.75 billion to prop up the ruble, according to the median estimates of 10 analysts surveyed by Bloomberg.

Policy makers are unlikely to allow a large, one-step devaluation because they “are concerned about the impact on household sentiment,” MacFarquhar said. “We instead expect a rapid series of smaller moves.”

The ruble may fall to 34.4 per dollar a year from now, MacFarquhar said. The currency slid to 28.0573 against the dollar yesterday, a 2 1/2-year low, as Urals crude, the country’s main export blend of oil, fell 11 percent to $44.27 a barrel, the most in seven years. The ruble was at 31.3078 versus the basket, the weakest end of the trading band the central bank defends.

To contact the reporter on this story: Emma O’Brien in Moscow at eobrien6@bloomberg.net

Last Updated: December 2, 2008 01:16 EST