April 28 (Bloomberg) -- The ruble weakened for a seventh day as concern about a new round of economic sanctions by the U.S. and European Union outweighed demand for the currency from Russian companies to pay taxes before public holidays.
The ruble slid 0.2 percent to 42.3680 against the central bank’s target basket of dollars and euros by 11:40 a.m. in Moscow. It lost 1.3 percent last week, when Standard & Poor’s lowered Russia’s credit rating to BBB- and the central bank raised the key interest rate 50 basis points to 7.5 percent to damp inflation. The yield on sovereign ruble-denominated debt due February 2027 declined 6 basis points to 9.59 percent.
The U.S. and EU may intensify sanctions on companies and individuals today over the crisis in eastern Ukraine. That prospect is countering demand for the ruble prompted by pending corporate tax payments of as much as 215 billion rubles ($5.96 billion) and public holidays on May 1 and 2, Dmitry Polevoy, chief economist for Russia and the Commonwealth of Independent States at ING Groep NV in Moscow, said in an e-mailed note.
“Many companies are storing ruble liquidity in advance to be able to make the payments due during the holidays,” he said.
The ruble is the second-worst performer this year among 24 developing-country currencies monitored by Bloomberg, having declined 8.9 percent against the dollar. It was little changed versus the greenback at 36.0735 and less than 0.3 percent weaker against the euro at 50.0344.
“The balance of power is not building in the ruble’s favor in the near term,” ZAO VTB Capital analysts Maxim Korovin and Anton Nikitin wrote in a note to clients.
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