Ruble Weakens Against Basket for Second Day on Free Float Bets

The ruble weakened to the lowest level in more than two months as investors bet the central bank’s move toward a free float will cause the currency to depreciate.

The ruble declined 0.2 percent to 38.2361 against the central bank’s basket of dollars and euros by 6 p.m. in Moscow, when the regulator stops open market operations. It closed at 38.3036 on Sept. 3. The yield on the government’s February 2027 ruble bond rose four basis points, or 0.04 percentage point, to 7.91 percent.

Bank Rossii is targeting a freely floating ruble from 2015 as it focuses on inflation. The regulator raised the corridor in which it buys or sells currency by 5 kopeks to 32.60-39.60 rubles versus the basket Nov. 21, the fifth such move this month. The next shift may happen as soon as today, according to ZAO Raiffeisenbank.

“The more frequent shifts of the central bank’s ruble corridor may have contributed to the ruble’s weakening,” Raiffeisenbank analysts led by Denis Poryvay said in an e-mailed note. “In addition to the direct impact on the ruble, this can lead to forming speculative expectations of a weaker ruble.”

Oil, Russia’s main export earner, swung between gains and losses today in London. Brent advanced as much as 0.4 percent to $111.43 a barrel after earlier falling 0.4 percent to $110.52 a barrel. The benchmark grade for half the world’s oil lost as much as 2.7 percent yesterday after Iran reached an interim accord on limiting its nuclear program before closing down less than 0.1 percent.

An index of the 20 most actively-traded emerging-market currencies fell 0.3 percent to 92.7188, data compiled by Bloomberg show. The ruble depreciated 0.3 percent against the euro to 44.6670 and weakened 0.1 percent per dollar to 32.9745.

“Foreign speculators are betting the transition to the ruble’s free float in the absence of strong domestic investors will lead to noticeable ruble weakness,” Dmitry Dorofeev, a strategist at BCS Financial Group in Moscow, said by e-mail.

Before it's here, it's on the Bloomberg Terminal.