Russia’s ruble weakened for the first time in five days amid expectations that the central bank will reduce borrowing costs at its Monday meeting and continue buying foreign exchange.
The ruble fell 0.8 percent to 54.74 per dollar as of 5:10 p.m. in Moscow on the last trading day before the policy session, ending its longest streak of gains in two months. The currency has gained 11 percent against the dollar this year, the best performance globally.
The Bank of Russia may reduce its key rate for the fourth time this year on Monday as inflation slows and policy makers seek to shore up the economy, a Bloomberg survey showed. The ruble has tumbled 9.9 percent since May 13 when the central bank started buying foreign exchange. Governor Elvira Nabiullina plans to boost reserves to $500 billion and has spent $3.6 billion in the current round of purchases.
“There are expectations that the central bank will continue to intervene and at least a 100 basis-point rate cut seems like a done deal,” Vladimir Miklashevsky, a strategist at Danske Bank A/S in Helsinki, said by e-mail. “Today is a good time to close longs in the ruble ahead of the central bank meeting on Monday, as tomorrow Russia is on holiday.”
A 100 basis-point cut would bring reductions this year to 550 basis points after a 650 basis-point emergency increase in December to stem the ruble’s slide.
Five-year government bonds fell, pushing the yield four basis points higher to 10.95 percent. The dollar-denominated RTS Index retreated 1.5 percent to 944.84.
The Micex Index of stocks retreated 0.6 percent, its second day of declines. OAO Lukoil slid 2.2 percent. First-quarter profit fell 60 percent after crude prices collapsed and payments from Iraq declined, Russia’s largest non-state oil producer said on Wednesday.
Novorossiysk Commercial Sea Port PJSC climbed 3.1 percent after it said its five-month cargo volume increased 1 percent from a year earlier to 58.7 million tons.