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Ruble Heads for Biggest Weekly Drop Since October on Crude Oil

The ruble headed for the strongest weekly drop since October after the price of crude, Russia’s main export earner, sank in the period.

The currency slid less than 0.1 percent against the dollar to 31.5420 by 6 p.m. in Moscow, when the central bank stops participating in trading. The ruble lost 1.5 percent against the dollar in the week, the most since Oct. 28, and fell 0.2 percent against the central bank’s dollar-euro basket to 35.9491 for a 1.6 percent weekly decline.

Brent oil fell 3.3 percent since April 12. The ruble is also being weakened by a seasonal increase in local companies’ demand for foreign currency to pay for imported goods as warmer weather allows them to push ahead with investment programs, Vladimir Osakovskiy, chief economist for Russia at Bank of America Corp. in Moscow, said by e-mail. The ruble’s 30-day volatility to the basket jumped to 8.42 from 3.01 on March 15.

“The traditionally supportive current account early in the year is beginning to shrink, which starts to undermine fundamental support to the ruble and makes it more sensitive to swings on global markets,” Osakovskiy said.

Bank Rossii sold the equivalent of 6 billion rubles ($190 million) in foreign currency in three sessions on April 16 to April 18, the regulator reported on its website. Revenue from sales of crude and natural gas comprise about 50 percent of Russia’s state budget income.

Insufficient Interventions

The ruble is trading at a level where the central bank sells about $70 million per day, which is “clearly insufficient to seriously prop up the currency,” ZAO Raiffeisenbank analysts headed by Denis Poryvay wrote in an e-mailed note.

The yield on benchmark OFZ bonds due February 2027 fell nine basis points, or 0.09 percentage point, to 7.01 percent, 17 basis points above a record low.

Net inflows into Russia-focused bond funds totaled $94 million in the week to April 17, OAO Gazprombank analysts wrote in a research note, citing EPFR Global data. That brought total inflow from the start of the year to $1.8 billion, Gazprombank said.

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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