Ruble Drops Most in Three Weeks Versus Dollar on Crude Slump

The ruble weakened the most against the dollar in three weeks as oil, Russia’s main export earner, declined.

The Russian currency weakened 1.3 percent to 32.96 per dollar by the 7 p.m. close in Moscow, the biggest drop since May 31. The country’s $3.5 billion of Eurobonds due July 2018 dropped, increasing the yield by three basis points, or 0.03 percentage point, to 3.672 percent.

Brent crude sank 2 percent to $90.88 a barrel as U.S. inventories surged amid concern the European debt crisis will drag down the global economy. Oil and gas together contribute about 50 percent of Russia’s state revenue, according to the government’s estimates. President Vladimir Putin hosted foreign investors today at the St. Petersburg International Economic Forum.

“Not one responsible expert today will try to forecast the oil price,” German Gref, the head of the nation’s biggest lender, OAO Sberbank, told reporters on the sidelines of the forum. “Accordingly, that’s what determines the ruble rate.”

Russia’s dependence on energy prices means the ruble is just as likely to slide to 38 per dollar as strengthen to 28, Gref said.

The ruble lost 0.7 percent to 41.5975 per euro and 1 percent to 36.8469 against the central bank’s dollar-euro basket. Investors increased bets on the currency weakening, with non-deliverable forwards showing the ruble at 33.6595 per dollar in three months, compared with expectations of 33.0465 per dollar yesterday.

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