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Ruble Heads for Four-Month Low Against Dollar After Crude Drops

May 17 (Bloomberg) -- The ruble fell against the dollar, heading for its weakest in almost four months as oil, Russia’s main export, sank.

The Russian currency depreciated for a 10th day, falling 0.9 percent to 31.19 per dollar as of 4:02 p.m. in Moscow and extending its streak of losses to the longest since Dec. 14. The country’s $3.5 billion of Eurobonds due 2018 dropped, increasing the yield by six basis points, or 0.06 percentage point, to 3.747 percent.

Brent crude retreated 0.6 percent to $109.08 per barrel after the European Central Bank suspended lending to some Greek institutions, fanning concern the region’s debt crisis will hurt fuel demand as economic growth slows. Oil and gas together contribute about 50 percent of Russia’s state revenue.

“We think it’s oversold and wait for a correction,” Sergey Fishgoyt, deputy head of foreign exchange at Otkritie Bank in Moscow, said by e-mail. “We’re starting to buy rubles.”

The 14-day relative strength index for the ruble’s rate against the U.S. currency climbed to 83.371, the highest on a closing basis since Sept. 26. A reading higher than 70 signals the currency may have weakened too quickly and may rally.

The ruble declined 0.4 percent to 39.58 per euro and depreciated 0.6 percent to 34.9571 against the central bank’s target dollar-euro basket. Investors increased bets on the currency weakening, with non-deliverable forwards showing the ruble at 31.7046 per dollar in three months, compared with expectations of 31.1615 per dollar yesterday.

To contact the reporter on this story: Jack Jordan in Moscow at jjordan22@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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