The ruble weakened to its lowest in more than two months against the central bank’s target basket of currencies as the withdrawal of a retail lender’s license added to the impact of easing yuan controls.
The ruble depreciated 0.3 percent to 38.0545 against Bank Rossii’s target basket of dollars and euros by 6 p.m. in Moscow, when Bank Rossii stops its market operations. That’s the lowest level on a closing basis since Sept. 5. The yield on the government’s February 2027 bonds rose one basis point, or 0.01 percentage point, to 7.83 percent.
The central bank revoked the license of Moscow-based OAO Master-Bank for repeatedly breaching money laundering laws. The yuan’s three-month forwards touched a record high after the People’s Bank of China strengthened the daily fixing to a record and elaborated on plans to ease exchange-rate controls.
“Some foreign investors are afraid of a possible banking crisis” in Russia, Vladimir Miklashevsky, a strategist at Danske Bank A/S in Helsinki, said by e-mail. “It all started yesterday with China, but the situation with Master-Bank spurred it.”
A banking crisis in 2004 started with the regulator revoking a license for suspected money laundering. Master-Bank is the 17th lender to lose its license since Elvira Nabiullina became Bank Rossii chairman in June, raising the total number to 23 this year, according to central bank data. During 2012, 23 licenses were pulled. Master-Bank’s press service wasn’t available when Bloomberg called the number on its website.
“All local things are influencing the sentiment. Everybody’s scared, that there’s some kind of flow coming, stop-losses were triggered,” Anton Nikitin, analyst at VTB Capital in Moscow, said in e-mailed comments.
The Finance Ministry sold 13.05 billion rubles ($397 million) of 15 billion rubles of 2028 bonds offered at auction today with a yield of 7.93 percent. It also placed 13.5 billion rubles out of 15 billion rubles offered of bonds due May 2020 with a 7.32 percent yield, according to statements on the ministry’s website.
The ruble weakened 0.4 percent against the euro to 44.4430 and dropped 0.3 percent against the dollar to 32.8280. An index of the 20 most actively-traded emerging-market currencies declined 0.1 to 93.2046, data compiled by Bloomberg show.
China’s central bank will “basically” end normal intervention in the currency market and widen the yuan’s trading band, Governor Zhou Xiaochuan wrote in a book explaining reforms outlined at a Communist Party meeting last week. The PBOC raised the reference rate 0.02 percent to 6.1305 per dollar, the strongest since a peg to the greenback was removed in 2005.
“If they let the yuan go, it’ll start strengthening, so it may be a good time to switch from other marginal currencies into the yuan,” Miklashevsky said.