The ruble weakened for the first time in three days as ING Groep NV lowered its forecast for the currency of the world’s biggest energy exporter, citing possible U.S. stimulus curbs and lower oil prices.
The ruble fell 0.5 percent against the dollar to 32.8660 by 6 p.m. in Moscow and retreated 0.4 percent to 37.4536 against the central bank’s dollar-euro basket.
The Russian currency and debt joined a global market rout last week after Federal Reserve Chairman Ben S. Bernanke said the regulator may start reducing bond purchases that fueled asset-price gains, and end the program in 2014 should risks to the U.S. economy abate. ING cut its third-quarter forecast for the ruble 6.5 percent to 34.30 against the dollar from a 32.18 estimate in May, according to an e-mailed note today. ING sees Brent oil averaging $105 a barrel from the fourth quarter to the third next year compared with an estimate of $110-$115 earlier.
“Tighter U.S. financial conditions and our new, lower forecast for Brent force us to revise our ruble outlook to the weaker side,” Dmitry Polevoy, an economist at ING in Moscow, said in the note. “We’re convinced that the U.S. dollar is about to embark on a cyclical rally, the likes of which has not been seen since the late 1990s.”
Brent pared last week’s 4.7 percent drop, rising 0.1 percent to $101.27 per barrel. ING sees the ruble at 36 rubles against the dollar in the fourth quarter of 2014 and at 35.20 rubles in the same period the following year, the report shows.
The Finance Ministry canceled a June 26 ruble-bond auction yesterday, the last this quarter, citing market conditions. Russia axed a June 5 sale and shelved an auction of 10 billion rubles ($304 million) of 15-year notes last week on a lack of competitive bids. The government scrapped a May 22 sale for the same reason and sold only 900 million rubles of 20 billion rubles in securities offered on May 29.
The central bank started buying rubles on May 29 to slow its slide. Bank Rossii, which reports currency intervention data with a delay and intervenes if the ruble weakens beyond certain levels against the dollar-euro target basket, spent the equivalent of 6.55 billion rubles of foreign currency on June 21, it said today.
The ruble weakened even as bond yields fell and companies bought the local currency to pay taxes. Orders for U.S. durable goods rose more than forecast in May, reflecting broad-based gains that signal manufacturing is stabilizing in the world’s biggest economy.
The yield on Russia’s Eurobonds due March 2030 fell 20 basis points to 4.431 percent, after climbing to the highest since December 2011 yesterday. The yield on benchmark ruble bonds due 2027 fell nine basis points to 8.28 percent, the first drop in four days.