Aug. 10 (Bloomberg) -- The ruble depreciated the most in more than a week against the dollar as oil declined and Russia’s central bank left its main interest rates unchanged for the eighth month.
The Russian currency weakened as much as 1 percent after Bank Rossii decided to leave rates unchanged, and traded 0.5 percent lower at 31.8275 at the close in Moscow. The ruble fell 0.4 percent versus the euro to 39.1841.
Russia is the only major emerging economy that hasn’t lowered borrowing costs this year. Policy makers left refinancing, repo and deposit rates unchanged at 8 percent, 5.25 percent and 4 percent respectively today, Bank Rossii said in an e-mailed statement. Oil, the country’s main export, slid as a collapse in China’s export growth added to signs of global economic weakening.
“The probability of a correction is considerable at the moment,” said Nikolay Podguzov, fixed-income strategist at VTB Capital, in a research note. “Hedging strategies aimed at protecting against risks of higher ruble volatility could be useful at the moment.”
Crude for September delivery dropped as much as 1.8 percent to $91.71 a barrel in New York.
Investor increased bets on further ruble weakening, with non-deliverable forwards showing the currency retreating to 32.3415 in three months, compared with 32.2015 per dollar yesterday.
Russian economic growth fell to the slowest pace in a year in the second quarter as weaker growth in China and Europe’s debt crisis curbed demand for its commodities exports, the Federal Statistics Service reported today. Gross domestic product rose 4 percent from a year earlier, the weakest pace since the same quarter of 2011 and down from 4.9 percent in the January-March period.
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