Ruble Weakens Most This Year Versus Dollar as Crude Oil Retreats

The ruble dropped the most this year as oil, Russia’s chief export earner, declined.

The Russian currency lost 1.3 percent to 29.3925 per dollar at the 7 p.m. close in Moscow, the biggest decline since Dec. 29. The ruble was 1 percent weaker at 39.0675 per euro and lost 1.1 percent to 33.7463 against the central bank’s target dollar- euro basket.

Brent crude dropped 1.3 percent to $123.90 per barrel after a government report showed U.S. inventories climbed the most in 20 months last week, signalling weaker oil demand from the world’s largest economy. Federal Reserve Chairman Ben S. Bernanke said yesterday that economic recovery in the U.S. isn’t assured.

Bank Rossii manages the ruble within a so-called “floating corridor” against a basket of dollars and euros to limit swings that erode exporters’ competitiveness. The current level against the basket implies the bank may be buying about $250 million a day in other currencies against the ruble, Sergey Fishgoyt, deputy head of foreign exchange at Otkritie Bank in Moscow, said by e-mail March 26.

Russia’s $3.5 billion of Eurobonds due July 2018 rose, lowering the yield five basis points, or 0.05 percentage point, to 3.798 percent. Russia is selling $7 billion of five-, 10- and 30-year Eurobonds in the biggest emerging-market sovereign issue since at least 2009, a banker with knowledge of the deal said on condition of anonymity.

More Value

The new five-year notes offer more value than U.S. Treasuries of the same maturity, Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., told CNBC yesterday.

The yield on Russia’s dollar bonds due in 2015 dropped 12 basis points to 2.274 percent. Eurobonds due the same year issued by OAO Sberbank, Russia’s largest lender, yielded seven basis points less than yesterday at 3.615 percent, while the yield on similar-maturity dollar debt from state gas monopoly OAO Gazprom declined five basis points to 3.392 percent.

Investors increased bets on the ruble weakening, with non- deliverable forwards showing the Russian currency at 29.7378 per dollar in three months, compared with expectations of 29.3966 per dollar yesterday.

The ruble has appreciated 9 percent against the dollar this year, heading for its best quarter since Bloomberg began compiling the data in 2003. Brazil’s real strengthened 2.4 percent over the same period, India’s rupee gained 4.3 percent and China’s yuan rose less than 0.1 percent, the data show.

To contact the reporter on this story: Jack Jordan in Moscow at jjordan22@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.