The ruble tumbled to its weakest level in 20 months and Russia’s bonds retreated after the Federal Reserve said it may curb stimulus this year, paring appetite for emerging-market assets.
The ruble dropped 0.7 percent against the central bank’s dollar-euro basket to 37.4766 by 6 p.m. in Moscow, the lowest level since October 2011. The ruble slid 0.9 percent to the dollar to 32.7665, the sixth worst performance among 24 emerging-market currencies tracked by Bloomberg.
The Russian currency and debt joined a global market rout after Fed Chairman Ben S. Bernanke said the regulator may start reducing bond purchases that have fueled asset-price gains, and end the program in 2014 should risks to the U.S. economy abate. Brent oil tumbled 2.9 percent to $103.06 per barrel. Crude and natural gas provide about 50 percent of Russian state revenue.
The situation on global markets is “the only thing causing the fear,” Andrei Mishko, a foreign exchange trader at MDM Bank in Moscow, said in a telephone interview.
The central bank started buying rubles on May 29 to slow its slide. Bank Rossii, which reports currency intervention data with a delay and steps up interventions if the ruble weakens beyond certain levels, spent the equivalent of 6.17 billion rubles ($188 million) of foreign currency on June 18.
“If the global picture remains negative we might again move to the level where the central bank sells $400 million per day,” Mishko said.
The yield on Russia’s Eurobonds due March 2030 jumped 43 basis points to 4.11 percent, the highest in more than a year. The yield on benchmark ruble bonds due 2027 jumped 31 basis points, or 0.31 percentage point, to 7.98 percent, the highest since October.
“There are no hysterics, but all bids in long-term bonds are 3 to 5 percent lower,” Yury Nefedov, a fixed income trader at Renaissance Capital in Moscow, said in e-mailed comments. “There are some buyers, mostly closing short positions.”
Investors are pulling money from emerging markets at the fastest pace in two years. More than $19 billion left funds investing in developing-nation assets in the three weeks to June 12, the most since 2011, according to EPFR Global.
The ruble may weaken a further 3.3 percent to 33.90 against the dollar on a new wave of outflows from Russia after Bernanke’s comments, Anton Zakharov, a foreign exchange analyst at OAO Promsvyazbank, said in e-mailed comments.
“The ruble is actually one of the least exposed to the Fed tightening among emerging markets,” Vladimir Kolychev, the head of research at OAO Rosbank, said in e-mailed comments. “Except for local government bonds, there was no build-up of foreign positioning on local markets whatsoever, so there are not many positions to be cleaned up as opposed to Latin America or Asia.”
The ruble’s three-month volatility rose 14 basis points to 11.2000, the highest since October 2012, data compiled by Bloomberg show.