Ruble Falls From 2-Week High on Urals Decline, U.S. Stimulus

The ruble retreated from a two-week high as Urals crude declined and a U.S. Federal Reserve policy maker said the Fed should refrain from stimulus given recent signs of improvement in the economy.

The Russian currency weakened 0.6 percent versus the dollar to 31.8625 at 7 p.m. in Moscow. The ruble gained less than 0.1 percent against the euro at 39.8650, leaving it 0.3 percent lower against the central bank’s currency basket, which is 55 percent dollars and 45 percent the common currency.

Urals crude retreated 1.1 percent to $113.53. Fed Bank of St. Louis President James Bullard said late yesterday recent signs of improvement in the economy would prompt him to oppose any new program by the Fed to buy bonds to reduce borrowing costs.

“This statement cuts investor appetite for risky assets including the ruble,” Alexey Egorov, currency analyst at Nomos Bank in Moscow, said by phone.

Investors increased bets on the ruble weakening against the dollar, with non-deliverable forwards showing the currency at 32.3511 in three months versus 32.1905 on Aug. 23.

Fed Chairman Ben S. Bernanke’s address to economists and central bankers at the Kansas City Fed’s conference in Jackson Hole, Wyoming, next week may improve risk appetite, Ivan Sinelnikov, a macroeconomist at Gazprombank in Moscow, said by e-mail.

“It may give a boost for market participants to start buying risky assets,” Sinelnikov said. “The ruble should benefit from this process.”

The extra yield investors demand to own Russia’s dollar bonds over U.S. Treasuries rose three basis points to 223, according to JPMorgan Chase & Co.’s EMBI Global Index. Yields on the government’s ruble bonds due April 2021 fell two basis points to 7.86 percent, data compiled by Bloomberg show.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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