Bank Rossii Stagflation Concern Drives Ruble to Five-Year Low

The ruble slid to a five-year low as flagging growth and rising prices curbed appetite for the currency of the world’s biggest energy exporter.

The ruble weakened 0.1 percent to 38.8244 against Bank Rossii’s target basket of dollars and euros by 4:36 p.m. in Moscow. The yield on government bonds maturing in February 2027 rose for a third day, adding two basis points to 8.06 percent, the highest in more than a month.

The combination of slow growth and above-target inflation, known as stagflation, is limiting the central bank’s tools for spurring demand, First Deputy Chairman Ksenia Yudaeva said yesterday. That’s weighing on the ruble along with falling prices for Brent crude and reduced demand for riskier emerging-market currencies as the Federal Reserve pares stimulus, according to Gaurav Saroliya, an emerging-markets strategist at UniCredit SpA.

“In the near term, negative factors for the ruble are dominating,” Saroliya said in e-mailed comments from London. Current-account data for the fourth quarter are unlikely to bring relief, Saroliya said.

Russia’s current-account surplus narrowed 61 percent to $5 billion in the fourth quarter, according to the median estimate of 15 economists polled by Bloomberg. Crude oil, Russia’s main export earner, slid 0.3 percent to $106.86 in London, close to the lowest level in two months. An index of the 20 emerging-market currencies traded against the U.S. dollar declined 0.2 percent to 91.04.

The ruble weakened 0.1 percent versus the euro to 45.4420 and traded little changed against the dollar at 33.4055.

Tax Support

The ruble may get support from the 590 billion to 660 billion rubles of taxes due from companies this month, OAO Promsvyazbank analyst Alexei Egorov said in a note on Jan. 15.

“Given all this negative ruble background, it’s entirely possible there’ll be no rebound, and we’ll hover around the current levels for the whole tax period, plus or minus 10 kopeks,” Alexander Myulberger, head of foreign-exchange trading at BCS Financial Group in Moscow, said in e-mailed comments.

Consumer prices rose 6.5 percent from a year earlier in December, more than the central bank’s target for a 16th month. That’s the second-fastest pace in Europe after Belarus, according to data compiled by Bloomberg. The economy probably grew 1.3 percent last year, falling short of the Economy Ministry’s 1.4 forecast, deputy minister Andrey Klepach told reporters yesterday in Moscow.

“Bad news for the ruble continues, and in a month’s time it’ll still be lower,” Myulberger said.

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

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