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Ruble Drops to Lowest This Year as Crude Oil Slides on China

The ruble sank to its weakest level this year as oil and global stock markets fell on slowing manufacturing in China and the euro area.

The ruble slid 0.7 percent against the dollar to 30.7600 by 7 p.m. in Moscow, the lowest since December and a 1.1 percent drop in the week. The currency weakened 0.2 percent to Bank Rossii’s dollar-euro basket to 34.8787. The yield on the government’s benchmark ruble bonds due February 2027 climbed four basis points, or 0.04 percentage point, to 7.21 percent.

Brent crude fell for a fourth day, declining as much as 1.4 percent to $109.82 a barrel. Data showed China’s manufacturing slowed for a second month while factory output in the euro area contracted for the 19th straight month. Oil and natural gas account for about 50 percent of Russia’s government revenue.

Oil’s retreat means the currency of the world’s biggest energy exporter may have further to fall, Artem Roschin, a forex trader at Aljba Alliance in Moscow, said by phone.

“With oil at $110 I would expect to see the basket at 35 rubles,” he said.

The end of the monthly tax payment period, when exporters sell hard currency revenue to buy rubles, will “temporarily weaken the ruble’s resistance to external factors,” Rosbank (ROSB) analysts led by Vladimir Kolychev said in a note to clients. Kolychev also forecast the ruble will weaken to 35 rubles versus the basket, which the central bank uses to smooth exchange-rate moves that can crimp exporters’ competitiveness.

“The situation on the currency market has changed, the ruble has stopped rising,” Alexandr Ermak, head of research at Region Broker Co., said by phone. “Ruble instruments are getting less appealing.”

To contact the reporter on this story: Vladimir Kuznetsov in Moscow at vkuznetsov2@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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