The ruble fell the most in more than a week after a Moscow court kept billionaire Vladimir Evtushenkov under house arrest as the U.S. dollar rallied.
The Russian currency weakened 0.9 percent, the most since Sept. 15, to 38.4925 per dollar as of 6 p.m. in Moscow. It has retreated 12 percent this quarter, the most among 24 emerging-market currencies tracked by Bloomberg. The ruble declined 0.6 percent versus the euro to 43.2365.
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 peers, rose to a four-year high on signs the Federal Reserve is moving closer to raising interest rates, reducing the allure of emerging-market assets. The detention of Evtushenkov in a money-laundering probe has sparked comparisons with the 2003 arrest of Mikhail Khodorkovsky that led to the dismantling of his Yukos oil company.
“The ruble is down against the dollar in correlation with many other assets, such as the euro, oil and emerging-market currencies,” said Dmitry Dorofeev, a fixed-income strategist at BCS Financial Group in Moscow. “The Evtushenkov news was also negative, sentiment-wise.”
The price of oil, which accounts for about half of Russia’s budget revenue, dropped 0.4 percent in London to $96.55 per barrel, near the lowest level in more than two years.
Ten-year government bonds climbed, pushing the yield down six basis points to a one-month low of 9.27 percent. The yield fell 48 basis points in the last eight trading sessions.
The ruble bond market may still be pricing in the successful results of yesterday’s debt auction, Igor Golubev, a fixed-income analyst at OAO Promsvyazbank, said by phone from Moscow. The Finance Ministry sold all 10 billion rubles ($262 million) of August 2023 notes on offer to a single bidder, according to data compiled by Bloomberg. Total demand was 47.5 billion rubles, the ministry said on its website.
“Many people weren’t expecting such a good placement,” Golubev said.
The 10-year bond trades with a 127 basis-point premium to the central bank’s key rate of 8 percent. This compares with an 84 basis-point low on June 6. The spread has the potential to compress further to 90 basis points, Golubev said.