Ruble Drops Most in 3 Weeks as Yields Rise on Crude Oil Retreat

July 22 (Bloomberg) -- The ruble weakened, paring last week’s gains, as crude oil dropped from the highest level in more than a year and bond yields climbed.

The currency fell 0.3 percent to 36.9820 against the dollar-euro basket, the most since July 1 on a closing basis, and lost 0.5 percent to 42.6660 against the euro by 6 p.m. in Moscow, when the central bank stops its open market transactions. The ruble fell less than 0.1 percent versus the dollar to 32.3295 after a 1 percent advance last week. The yield on benchmark OFZ bonds due February 2027 increased one basis point to 7.59 percent.

Oil, Russia’s main export earner, fell as much as 0.5 percent to $107.54 per barrel in New York. The oil and natural-gas industries contribute about 50 percent of Russia’s budget revenue. The ruble climbed last week as investors speculated that the Federal Reserve will keep stimulus measures in place, boosting appetite for riskier, emerging-market assets.

“Fears that oil will extend its drop added pressure to the Russian currency,” Anton Zakharov, foreign-exchange and commodities analyst at OAO Promsbyazbank in Moscow, said by e-mail. “Investors started fixing profits today after gains.”

Fed Chairman Ben S. Bernanke told lawmakers that the central bank’s $85 billion of monthly bond purchases “could be reduced more quickly or expanded” depending on the pace of recovery in the U.S.

The ruble rose earlier today as tax payments in the world’s biggest energy exporter bolstered demand. The payments support the currency as companies convert export revenue into rubles. JPMorgan Chase & Co.’s Emerging Currencies Index climbed 0.3 percent to 91.43.

To contact the reporter on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net