Ruble Resumes Decline as Oil Drops, Dollar Gains on Fed Outlook

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The ruble declined for the fifth time in six days, heading for the lowest level in almost three weeks, as oil dropped and the dollar gained amid speculation the U.S. is moving closer to raising interest rates.

The Russian currency weakened 1.2 percent against the dollar, extending its slide to 2.5 percent since the Bank of Russia said that it would use the ruble’s strength to bolster its international reserves. The losses trimmed the currency’s world-leading gains this year to 20 percent.

The Bloomberg Dollar Index rose to the highest level in more than a month after Federal Reserve Chair Janet Yellen said Friday it would be “appropriate” to raise borrowing costs this year for the first time since 2006 if the economy improves. Data on Tuesday showed orders for capital equipment rose in April for a second straight month, a sign U.S. business investment could pick up in the second half of the year. The strong dollar pushed crude oil lower, sending it below $65 per barrel in London.

“The Brent price failed to settle above $70 per barrel and keeps fluctuating around $65, while the U.S. dollar is becoming more attractive for global investors,” Vladimir Miklashevsky, a strategist at Danske Bank A/S in Helsinki, said in e-mailed comments.

The Bloomberg Dollar Spot Index gained 0.9 percent to 1,190.99, the highest level since April 22 on a closing basis. The ruble weakened to 50.59 a dollar. The Micex Index of equities fell 0.1 percent to 1,653.16.

Yields on five-year government bonds rose 17 basis points to 10.78 percent on Monday, reducing the decline this month to 23 basis points.

The Finance Ministry will offer 10 billion rubles in May 2019 fixed-rate bonds and 10 billion rubles in January 2025 floating-coupon bonds at government bond auctions for Wednesday. The ministry has already sold 174 billion rubles ($3.5 billion) of bonds at face value this quarter, or 70 percent of its plan.

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