The ruble dropped from a three-week high against the dollar as tensions between North and South Korea and the prospect of higher Chinese interest rates spurred investors to shun riskier assets.
Russia’s currency dropped 0.7 percent to 31.2125 per dollar by 1:12 p.m. in Moscow, after closing yesterday at 30.99, the strongest since Nov. 15. Oil, Russia’s biggest export earner, also declined, losing as much as 1.2 percent to $87.61 a barrel in New York.
The dollar climbed against all but two of the more than 20 emerging-market currencies tracked by Bloomberg today, after China’s government shifted the release of inflation data to Dec. 11 from next week, stoking speculation the world’s fastest growing economy will raise official borrowing costs this weekend to counter accelerating consumer prices. Risk appetite was also damped by a Yonhap News report that North Korea had fired artillery shells near the disputed border with its southern neighbor.
“The whole of the emerging markets are on the back-foot at the moment and the ruble is no exception,” Piotr Matys, an emerging-markets analyst at 4Cast Ltd., said by phone from London today. “Concern China could lift rates and the North Korean situation is weighing on risk appetite and it’s definitely risk off at the moment.”
The ruble was little changed at 35.7302 versus the dollar-euro basket used by Russia’s central bank to manage the currency and temper swings that erode exporters’ competitiveness. The basket rate is calculated by multiplying the dollar-ruble rate by 0.55, the euro-ruble rate by 0.45, then adding them together. The ruble gained as much as 0.7 percent to 41.1958 per euro today, the strongest since Dec. 2.
The ongoing European debt crisis will continue to spur gains in the ruble against the euro zone’s currency, Matys said. European Union finance ministers ruled out Dec. 6 increasing the body’s 750 billion-euro ($1 trillion) crisis fund for heavily indebted members, after giving Ireland an 85 billion-euro bailout.
Still, the ruble is more likely to depreciate against the dollar and target basket toward the end of the year as Russian banks and companies seek out dollars to repay foreign currency-denominated loans, Matys said. The private sector has about $16 billion in foreign debt, including interest-rate payments, due this month, double the $8 billion of redemptions in October and November, central bank data shows.
Once the redemption period is over, the ruble will probably strengthen versus the basket in the first half of 2011 as oil prices above $90 a barrel feed into Russia’s current account, according to both Matys and Citigroup Inc.’s Moscow-based economists Elina Ribakova and Natalia Novikova.
The ruble could advance 5.1 percent to as strong as 34 against the basket in the next six to 12 months, the Citigroup analysts wrote in a note to clients e-mailed today.
Russia’s dollar bonds due 2020 fell for a third straight day today, pushing the yield up 4 basis points to 4.86 percent, the highest in a week. The yield on government ruble bonds maturing 2016 snapped a six-day decline, rising 12 basis points to 7.4 percent, the biggest advance since Oct. 6.