Ruble Drops Most in Week on Rate-Cut Bets, Declining Oil Price

The ruble fell the most in more than a week as oil declined and investors bet inflation slowing to a 13-month low will allow the central bank to cut interest rates.

Russia’s currency depreciated 0.4 percent against Bank Rossii’s target basket of dollars and euros to 37.4712 by 6 p.m. in Moscow, the steepest one-day slide since Sept. 26. The yield on ruble-denominated benchmark debt due February 2027 rose five basis points, or 0.05 percentage point, to 7.67 percent.

Consumer price growth slowed to 6.1 percent in September from a year earlier, compared with 6.5 percent in August, the Federal Statistics Service said on Oct. 4. The central bank, which is due to hold a monetary policy meeting on Oct. 14, has kept the main lending rates unchanged for the past year as inflation remained above its target range of 5 percent to 6 percent. Crude, Russia’s chief export earner, fell 1.1 percent to $108.23 per barrel in London.

The September inflation data make the chance of a rate cut “increasingly more possible as we head into year-end,” Tradition analysts said in an e-mailed note. A deterioration in the current account surplus means the ruble will probably underperform in coming sessions, they said.

The current-account surplus shrank to $1.1 billion in the third quarter, compared with $5.83 billion a year ago, Bank Rossii said Oct. 3. Net capital outflow from Russia was $12.9 billion over the three months through September, compared with $7 billion in the previous quarter.

Oil Declines

West Texas Intermediate crude dropped 1.8 percent to $102.02 as output in the Gulf of Mexico resumed after a tropical storm weakened and the U.S. came closer to breaching its debt ceiling.

The failure of U.S. lawmakers to pass a budget and avert a government shutdown last week is fueling concern they won’t agree on raising the $16.7 trillion debt limit. House Speaker John Boehner said on ABC yesterday that he doesn’t intend to let the government default.

The ruble rate against the basket is locked in the 37.30-37.65 range as investors await U.S. labor market data, according to Igor Akinshin, a foreign-exchange trader at OAO Alfa-Bank. U.S. Government data from payrolls to retail sales will be delayed as long as the shutdown continues.

“Everybody’s waiting for payrolls. They should provide a charge both for the euro and the ruble,” Akinshin said.

An index of 20 emerging-market currencies compiled by Bloomberg snapped five days of gains, declining lees than 0.1 percent to 94.4287. The ruble weakened 0.3 percent against the dollar to 32.2935 and dropped 0.4 percent against the euro to 43.8050.

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