Ruble Bond Yield Rises to Week High; Currency Extends Decline

The ruble weakened and yields on one-year benchmark government bonds climbed to the highest level in a week after a decline in Urals crude, Russia’s main export blend.

The ruble depreciated less than 0.1 percent to 32.3700 per dollar at 7 p.m. in Moscow, extending a 1.5 percent decline last week. Russia’s currency rose about 0.1 percent versus the euro to 40.6525 today and was unchanged against the central bank’s currency basket. An index of one-year domestic government bond yields compiled by Micex rose more than seven basis points to 6.239 percent, the highest level since Aug. 24.

Urals dropped 0.5 percent to $112.60. Oil futures dropped as much as 0.5 percent in earlier trading as manufacturing unexpectedly contracted in China and crude production resumed in the Gulf of Mexico after Hurricane Isaac. Brent rose 0.8 percent to $115.49 per barrel. The ruble gained on Aug. 31 after U.S. Federal Reserve Chairman Ben Bernanke said he wouldn’t rule out more stimulus.

“Despite Brent being above $114 per barrel, an emerging negative trend will affect the national currency’s position,” Alexey Egorov, an analyst at Nomos Bank in Moscow, said by e- mail.

Non-deliverable forwards show the ruble at 32.8180 per dollar in three months versus 32.8635 on Aug. 31.

The extra yield investors demand to own Russia’s dollar bonds over U.S. Treasuries was unchanged at 222, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporter on this story: Lyubov Pronina in London at lpronina@bloomberg.net

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