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Ruble Extends Third Day of Losses on Falling Crude Oil Prices

The ruble weakened for a third day, as crude oil, Russia’s main export earner, fell and investors began to close long positions on the currency.

The ruble depreciated 0.8 percent to 31.2125 as of 7 p.m. in Moscow. It lost 0.8 percent against the euro and the central bank’s target euro-dollar basket to 40.4650 and 35.5043, respectively.

The Russian currency strengthened as much as 0.5 percent in intraday trading as oil advanced on bets Japan’s expanded program of monetary easing will bolster fuel demand. Oil slid more than 3 percent to $92.36 per barrel in New York following a U.S. Energy Department report that showed inventories surged the most since March and on speculation Saudi Arabia is taking action to reduce oil prices. Oil and gas contribute about 50 percent of Russia’s state revenue.

“The drop in oil prices is significant and the ruble is naturally taking a cue from the oil price movements,” Ivan Tchakarov, chief economist at Moscow-based Renaissance Capital. Market players continue to “lock in profits on the back of the very fast ruble appreciation we had seen recently on the back of Fed’s QE3,” he said.

The ruble surged the most against the dollar in more than two years on Sept. 14 after U.S. Federal Reserve Chairman Ben Bernanke promised to buy $40 billion of mortgage debt a month and hold the federal funds rate near zero “at least through mid-2015.” Russia’s central bank also unexpectedly raised the refinancing rate last week to 8.25 percent from 8 percent.

Non-deliverable forwards showed the ruble at 31.6758 a dollar in three months compared with 31.4160 yesterday.

The extra yield investors demand to own Russia’s dollar bonds over U.S. Treasuries fell two basis points to 192, 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

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