The ruble weakened to its lowest in more than four years as company purchases of foreign currency for debt payments added to concern that Russia’s economic growth is flagging.
The ruble declined for a third day, losing 0.4 percent to 38.3972 against the central bank’s target basket of dollars and euros by 6 p.m. in Moscow, when the central bank stops its open market operations. That’s the weakest level since August 2009. The yield on the government’s February 2027 ruble bond climbed seven basis points, or 0.07 percentage point, to 7.98 percent.
Companies will have to pay back $29.6 billion in principal of foreign debt in December and Russians may also be seeking other currencies ahead of the New Year’s holiday period, Dmitry Polevoy, ING Groep NV’s chief economist for Russia, said by e-mail. While inflation accelerated last month, the economy expanded at 1.2 percent in the third quarter from a year earlier, matching the pace of the previous three months, Federal Statistics Service data show.
“The ruble has been under pressure for the past two weeks,” Polevoy said. “Weak economic growth amid relatively high inflation add to the negative sentiment of foreign investors.”
Consumer prices increased 6.3 percent in October from a year earlier, compared with 6.1 percent in September, the statistics agency said Nov. 6. Gross domestic product growth will “entirely likely” miss the government’s 1.8 percent target for the year, Economy Minister Alexei Ulyukayev said Nov. 13.
In addition to the debt payments, the ruble may also be weakening after Bank Rossii’s Nov. 20 decision to revoke the license of OAO Master-Bank, which “points to the seriousness of the central bank’s intentions to clean up the system,” Polevoy said.
The ruble depreciated 0.5 percent against the euro to 44.9375 and weakened 0.3 percent per dollar to 33.0470. The Finance Ministry sold 25.3 billion rubles ($766 million) of 2023 and 2019 bonds at auctions today out of 35 billion rubles on offer, it said on its website.
An index of the 20 most actively-traded emerging-market currencies fell 0.3 percent to 92.6074, data compiled by Bloomberg show.