Ruble Drops to One-Month Low on Oil, Economy, Still Leaves SocGen Bullish

The ruble weakened to its lowest level in more than a month against the dollar as oil prices slid and speculation the global economic recovery is faltering deterred investors from emerging markets.

Russia’s currency depreciated as much as 0.6 percent to 30.8125 per dollar, its weakest intraday level since July 13, and was down 0.5 percent at 30.7824 as of 12:53 p.m. in Moscow. Government debt fell, pushing the yield on 5 percent dollar bonds due 2020 up 6 basis points to 4.53 percent.

Crude, Russia’s biggest export earner, declined for a fifth day, losing as much as 1.3 percent to $72.15 a barrel in New York on concern U.S. oil inventories rose last week as the economy slowed. The dollar gained against the euro and most emerging-market currencies before a report that analysts expect will show U.S. home sales fell in July, adding to concern the world’s largest economy is slowing.

“Oil prices are going down and risk aversion is on the rise,” said Gaelle Blanchard, an emerging-market analyst at Societe Generale SA in London. “It’s part of a more general move on emerging-market currencies.”

The ruble has lost 1.7 percent against the dollar so far this year. The currency was little changed at 38.8750 per euro, leaving it 0.2 percent weaker at 34.4302 versus the basket Russia’s central bank uses to manage the ruble.

Year-End Strength

Investors increased bets that the ruble will weaken for a fifth straight day, with non-deliverable forwards showing the currency at 31.0275 per dollar in three months, the weakest since July 9. The contracts, known as NDFs, are a way of gauging market expectations of a currency’s movements as they allow companies to hedge against possible fluctuations in an exchange rate and foreign investors to speculate on currencies in countries that limit their participation in the markets.

Today’s weakness is not part of a long-term trend for the ruble, said Societe Generale’s Blanchard, who predicts the currency will strengthen to 33.50 versus the basket by year-end.

France’s second-largest bank is not anticipating another U.S. recession this year and thus is “still bullish” on the ruble, Blanchard said.

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

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