The ruble slid the most this month against the dollar as chaos in the Middle East prompted investors to take their money out of markets viewed as posing a higher risk.
Russia’s currency weakened for the first day in four, sliding 0.3 percent by the 5 p.m. close of trading in Moscow to 29.2680 per dollar, its biggest drop since Jan. 28.
Unrest has spread to Libya, Bahrain, Iran and Yemen, after protesters brought down the ruling regimes of Egypt and Tunisia amid complaints about corruption and rising prices. The tension has spurred investors to seek out the relative safety of the dollar, with all but two of the 25 emerging-market currencies tracked by Bloomberg sliding against the greenback today.
The ruble is sliding amid the “risk-off environment,” Dmitry Gourov, an emerging-markets strategist at UniCredit SpA, said by e-mail from London. “It’s a short-term profit-making opportunity.”
The ruble weakened for a fourth day against the euro, losing 0.4 percent to 40.0375 and erasing an earlier advance of as much as 0.6 percent. That left the currency 0.4 percent lower at 34.1143 against the target dollar-euro basket used by the nation’s central bank to temper swings in the ruble. 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.
Middle Eastern tensions pushed crude oil, Russia’s biggest export earner, to a two-year high of $94.49 a barrel today in New York, an advance of as much as 9.6 percent.
Defenders of the Fatherland
The spate of risk aversion eliminates any support the ruble may receive from oil prices, Gourov said in a research note e-mailed earlier today. UniCredit is advising clients to bet on this decline by placing short positions, or bets an asset will drop, on the ruble versus the basket today and on Feb. 24, the note said. Russian markets are closed tomorrow for Defenders of the Fatherland Day.
Ruble-denominated government debt due August 2016 fell a second day, pushing the yield 4 basis points higher to 7.59 percent. The yield on sovereign dollar bonds maturing in 2020 was little changed at 5.12 percent. Dollar debt due 2015 rose, with the yield 3 basis points lower at 3.68 percent.