Ruble Weakens Third Day Versus Basket as Debt Payments Loom

The ruble weakened for a third day on speculation the central bank may pare its defense of the Russian currency and as companies bought dollars and euros before foreign debt payments next month.

The ruble declined 0.2 percent to 37.2683 against the central bank’s target dollar-euro basket by 6 p.m. in Moscow, when the central bank stops its market operations. The currency weakened 0.2 percent against the euro to 43.4695 and slid 0.3 percent to 32.1925 against the dollar.

Russian companies must repay about $5.5 billion of bonds and syndicated loans in October, creating additional demand for foreign currency, according to Anton Zakharov, a money manager at OAO Promsvyazbank. A move now by the central bank to widen the ruble band within which it intervenes to smooth volatility would accelerate the currency’s drop, VTB Capital analysts Maxim Korovin and Anton Nikitin said in an e-mailed note.

“Many market participants are worried about the central bank’s ability to widen the basket band around the current ruble levels,” they said.

Bank Rossii has let the ruble trade in a seven ruble-wide corridor against the basket since July 2012 and intervenes when the currency approaches its weaker or stronger ends. The central bank moves the band as interventions accumulate. The corridor is currently at 32.25 to 39.25 rubles.

The ruble is trading around the level at which the central bank increases its daily interventions to $200 million from $70 million, Korovin and Nikitin said.

Greater ruble volatility as the central bank moves toward an inflation-targeting regime brings more advantages than disadvantages, Bank Rossii governor Elvira Nabiullina told the Itar-Tass news service Sept. 4.

The yield on Russia’s 10-year ruble bonds was unchanged at 7.25 percent. Companies conclude the regular tax period on Sept. 30 with corporate income tax payments.

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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