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Ruble Weakens to 11-Month Low as Yields Jump on Stimulus Concern

The ruble slumped to an almost one-year low and Russian bond yields surged to a seven-month high as European Central Bank President Mario Draghi reignited speculation over the tapering of global monetary stimulus.

The Russian currency declined 0.5 percent against the dollar-euro basket to 36.8370 by 6:47 p.m. in Moscow, the weakest level since June 25. It weakened 0.2 percent versus the dollar to 32.2170. The yield on the government’s benchmark ruble bonds due in 2027 increased 15 basis points, or 0.15 percentage point, to 7.62 percent, the highest since November 19, according to data complied by Bloomberg.

Draghi said the euro-area economy will return to growth by the end of the year, handing policy makers a reason to hold back fresh stimulus. Emerging-market assets have retreated since Federal Reserve Chairman Ben S. Bernanke said on May 22 that the U.S. central bank “could take a step down” in its pace of debt purchases in the next few months if it saw sustained improvement in the economy. Russia’s economy is growing at the weakest pace since 2009, also helping to weaken the ruble.

“OFZ and ruble, along with other risk assets, fell on Draghi’s comments,” Dmitry Dorofeev, strategist at BCS Financial Group, said in e-mailed comments.

Brent crude gained 0.5 percent to $103.55 per barrel, the highest in a week. The oil and natural-gas industries contribute about half of Russia’s budget revenue.

“I was negative on the ruble, but didn’t it expect it to fall this hard,” Andrei Mishko, a foreign exchange trader at MDM Bank in Moscow, said by phone today.

Russia’s economy grew 1.6 percent in the first quarter, the weakest pace since a contraction in 2009, according to the statistics service. The expansion may accelerate to 2.3 percent in the second quarter, according to the median estimate of nine economists in a Bloomberg survey.

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