Ruble Weakens to Record Low Against Basket as Currencies Slide

The ruble dropped to a record low against the basket as steps by central banks in Turkey and South Africa failed to shore up emerging-market currencies.

The ruble weakened 1.2 percent to 40.9632 against Bank Rossii’s target dollar-euro basket, the lowest level on a closing basis, as of 6:01 p.m. in Moscow. The currency was at 40.9332 by 6 p.m., when the central bank stops its market operations. The yield on ruble-denominated OFZ bonds due February 2027 rose 14 basis points to 8.39 percent.

The Turkish lira reversed gains and South Africa’s rand depreciated, even as their central banks lifted rates to stem capital outflows. Investors have fled emerging markets since May, when the then Fed’s Chairman Ben S. Bernanke mentioned the possibility of tapering the monetary stimulus programs. The Fed, which concludes a two-day meeting today, will cut its bond-purchase program in $10 billion increments over the next six gatherings, according to a Bloomberg survey of economists.

“The U.S. dollar looks much more attractive than emerging currencies on expected actions by the Fed,” Vladimir Miklashevsky, a strategist at Danske Bank A/S in Helsinki, said in e-mailed comments. “High volatility is a typical phenomenon for the emerging markets and central banks cannot do anything about it.”

The central bank may have spent about $2.8 billion to slow the ruble’s decline today, according to Dmitry Dorofeev, a money manager at BCS Financial Group in Moscow. That would be the biggest intervention since Sept. 2011, according to central bank data.

The Russian regulator shouldn’t raise interest rates, Russia’s Finance Minister Anton Siluanov said during a government meeting today. Bank Rossii left its main lending rate unchanged at 5.5 percent for a 15th month in December, after inflation accelerated more than forecast the month before.

The ruble depreciated 1.2 percent against the dollar to 35.1710 and was 1.1 percent weaker at 48.0060 per euro. An index of the 20 most-actively traded emerging markets currencies fell 0.4 percent.

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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