Ruble Weakens Against Basket on Signal of Future Monetary Easing

The ruble depreciated against Bank Rossii’s dollar-euro basket after the central bank signaled future monetary easing with a “dovish” statement even as it left the main interest rates unchanged today.

The ruble slumped 0.2 percent against the basket to 35.1505 by 3:26 p.m. in Moscow, the weakest since Dec. 25. The ruble depreciated 0.3 percent against the dollar to 31.1675, the weakest since Nov. 28.

Bank Rossii kept the refinancing rate at 8.25 percent for a seventh month, a move forecast by 17 of 21 economists in a Bloomberg survey. Policy makers cut costs on loans backed by gold and non-marketable assets, as well as some longer-term repurchase operations by a quarter point. They also dropped last month’s phrase that market rates were acceptable, saying economic growth shows “increased risk of deceleration.”

“We view the decision as easing, although it does not impact the main policy rates, and the statement as rather dovish,” Vladimir Osakovskiy, chief economist for Russia at Bank of America Corp., said by e-mail. That is negative for the ruble and may give support to ruble bonds, he said.

Yields on benchmark domestic OFZ bonds due Feb. 2027 declined one basis point, or 0.01 percentage point, to 7.33 percent, the lowest level since March 7. Yields on OFZ notes due March 2014 were unchanged at 5.75 percent.

“We wouldn’t rule out some OFZ curve flattening,” Vladimir Kolychev, head of research at OAO Rosbank (ROSB), said by e- mail. Short-term yields may rise after bets on a reduction in shorter-term repurchase rates were proved wrong, he said.

To contact the reporter on this story: Vladimir Kuznetsov in Moscow at

To contact the editor responsible for this story: Wojciech Moskwa at

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