The ruble extended the worst weekly decline since January after U.S. employment data bolstered the case for higher interest rates this year and Bank of Russia continued foreign-currency purchases.
The currency weakened 0.6 percent to 56.799 against the dollar by 4:56 p.m. in Moscow, bringing the drop in the past five days to 7.9 percent. The ruble fell 3.8 percent on Thursday to a two-month low after central bank Governor Elvira Nabiullina targeted boosting reserves by about $140 billion over the next few years to $500 billion.
The ruble is the worst-performing global currency in the past month as the bank and Finance Ministry bought dollars in a move analysts said was aimed at stemming its recent rally. Emerging-market currencies slumped as U.S. payrolls climbed the most in five months in May and pay growth picked up, supporting forecasts the Federal Reserve will raise its key rate this year.
‘The strong jobs report is sending most emerging-market currencies down,’’ Sebastien Barbe, the Paris-based head of emerging-market research and strategy at Credit Agricole CIB, said by e-mail. “Should ruble depreciation pressure intensify, the market would likely look for what the central bank has to say and maybe would expect Bank of Russia to be precise on its intervention policy.”
While the start of dollar purchases on May 13 coincided with official statements that the ruble’s advance had gone too far, the currency’s weakening spurred by flare-ups in Ukraine this week risks stoking inflation.
Policy makers bolstered the ruble after Nabiullina’s comments, with First Deputy Governor Ksenia Yudaeva saying today foreign-currency purchases may be halted, while her colleague Dmitry Tulin said yesterday the bank could even start selling foreign currency if volatility jumps.
The authority has purchased about $3.081 billion, including $200 million on June 3, since the new reserve-accumulation program -- which involves buying between $100 million and $200 million daily -- started.
The U.S. data “signal tightening of Federal Reserve policy, which is negative for emerging currencies,” Yury Tulinov, head of research at PAO Rosbank in Moscow, said in e-mailed comments.
Government bonds fell for a third day, pushing five-year yields up 18 basis points to 11.41 percent, the highest since April 28. The Micex Index of stocks rose 0.3 percent to 1,642.69, the second day of gains.
OAO Lukoil and OAO GMK Norilsk Nickel paced the advance, adding 1 percent and 2.3 percent respectively. OAO Mechel surged 7 percent after Andrey Kostin, VTB Group’s Chief Executive Officer, said the lender agreed on restructuring the coking coal producer’s main debt and will delay the repayment to 2018-2019.
Gold and currency reserves fell 24 percent in the last 12 months to $357 billion as of May 29, largely because the central bank took steps to defend the currency against the effect of sanctions imposed after the annexation of Crimea.
Russia, which derives about 50 percent of its revenue from energy industries, abandoned its managed exchange rate in November as a slump in oil accelerated.