Ruble Weakens for Third Day, Reversing Early Gain as Oil Falls

The ruble fell for a third day against the dollar as oil, the country’s main export, retreated.

Russia’s currency depreciated 0.1 percent to 31.855 per dollar at 7 p.m. in Moscow, the weakest level since Aug. 3, after earlier gaining as much as 0.5 percent. The ruble fell 0.4 percent to 39.33 versus the euro and declined 0.2 percent against the central bank’s target dollar-euro basket.

Crude retreated 0.5 percent to $92.43 a barrel in New York as concern that the global economy is slowing outweighed speculation that Israel may strike Iran, the third-biggest producer the Organization of Petroleum Exporting Countries in July. Data today showed Japan’s economy grew less than forecast, while Bank of America Corp. cut its outlook for Chinese growth. Crude and natural gas contribute about 50 percent to Russia’s state revenue.

“The oil price is the definitive factor for the ruble,” said Pyotr Neimyshev, the head of foreign exchange at Otkritie Financial Corp. in Moscow. The Russian currency may weaken to 32 per dollar in the next few weeks as oil falls, Neimyshev said.

Investors increased bets on the ruble weakening, with non- deliverable forwards showing the currency at 32.362 per dollar in three months, compared with expectations of 32.3515 on Aug. 10.

The extra yield investors demand to own the Russia’s dollar bonds over U.S. Treasuries fell six basis points, or 0.06 percentage point, to 225, according to JPMorgan Chase & Co.’s EMBI Global Index. Yields on the government’s dollar bonds due March 2030 fell six basis points to 3.15 percent, headed for the biggest decline in a week, data compiled by Bloomberg show.

To contact the reporters on this story: Lyubov Pronina in Moscow at lpronina@bloomberg.net; Michael Patterson in London at mpatterson10@bloomberg.net

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

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