Ruble Heads for Worst Quarter in Year on Commodities Outlook

The ruble was poised for the biggest quarterly drop in a year on concern commodities will decline and as companies finished paying taxes.

The ruble depreciated 0.3 percent against the dollar to 32.9075 by 6 p.m. in Moscow, a 5.6 percent decline in the quarter. The currency lost 0.2 percent against the dollar-euro basket to 37.4005, extending its drop in the quarter to 6.4 percent.

Russia’s central bank has been buying rubles since May 29 to slow a 3.1 percent slide against the basket this month after U.S. Federal Reserve Chairman Ben S. Bernanke said the regulator may start reducing bond purchases that have fueled asset-price gains. Russian companies are due to pay income tax today. The Standard & Poor’s GSCI Index of Commodities retreated 5.9 percent in the quarter.

“The currency may weaken at the start of next month if commodities drop,” Anton Zakharov, a foreign-exchange analyst at OAO Promsvyazbank, said by phone. “Demand for the ruble fell a lot at the start of the month mainly because of concerns surrounding the potential curb to the speed of the Fed’s easing program, as well as a drop in oil prices.”

Speculation a plan by the Finance Ministry to buy foreign currency on the market for its wealth funds will weaken the ruble helped drive it to the lowest since 2009 against the basket on June 20.

Yields Climb

Bank Rossii, which reports intervention data with a delay and purchases the currency if the ruble weakens beyond certain levels against the basket, spent the equivalent of 6.57 billion rubles ($201 million) of foreign currency on June 27, it said today.

Brent crude rose 0.2 percent to $103.02 per barrel, advancing for a fifth day. Russia receives about 50 percent of its budget revenue from the oil and natural-gas industry.

The yield on benchmark ruble debt due 2027 jumped nine basis points to 7.96 percent, the first day of gains in four. That took the increase in the quarter to 61 basis points. The yield on Russia’s Eurobonds due March 2030 was little changed at 4.235 percent, after climbing to the highest since December 2011 on June 24.

The central bank on June 25 raised the band in which it allows the ruble to trade against its target dollar-euro basket, central bank Deputy Chairman Sergey Shvetsov said June 26 in Moscow. The regulator moves the corridor 5 kopeks when currency interventions reach $450 million and the band stood at 31.65-38.65 rubles as of May 31, according to Bank Rossii’s website.

Loosening Controls

The central bank is loosening its controls on the currency as it aims to complete a transition to targeting inflation instead of the exchange rate by 2015.

The Finance Ministry canceled a ruble-bond auction scheduled for June 26 this week, citing market conditions. It also axed a June 5 sale and shelved an auction of 10 billion rubles of 15-year notes last week on a lack of competitive bids. The government scrapped a May 22 sale for the same reason and sold only 900 million rubles of 20 billion rubles in notes offered May 29.

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