Ruble Trades Near 5-Year Low as Bank Rossii Pares Interventions

The ruble weakened to the lowest level in almost five years after Russia’s central bank scaled back daily market interventions as it moves to a free-floating currency.

The ruble dropped 0.4 percent to 38.6457 against Bank Rossii’s target basket of dollars and euros by 6 p.m. in Moscow. That compares with a close of 38.6573 on Jan. 6. Russian government bonds maturing in February 2027 fell, pushing the yield up two basis points, or 0.02 percentage points, to 7.99 percent.

The central bank cut its so-called targeted daily interventions to zero starting today from $60 million. That means Bank Rossii will reach the amount of cumulative interventions required to trigger a five-kopek shift in the ruble trading band more quickly and the corridor will be moved every two days as it currently sells $200 million per day, according to Vladimir Osakovskiy, Bank of America chief economist for Russia and the Commonwealth of Independent States.

The news is “slightly negative for the ruble as it reduces the potential support from such interventions,” Osakovskiy said in e-mailed comments.

Bank Rossii plans to abandon interventions and switch to a free float by 2015 and has spent $27 billion since it started buying local currency to slow its decline in May last year, according to data compiled by Bloomberg.

The ruble depreciated 0.4 percent versus the euro to 45.3100 and weakened 0.5 percent against the dollar to 33.1915.

The move might hurt sentiment toward the ruble, offsetting the traditionally supportive first-quarter current account data, Dmitry Polevoy, chief economist for Russia and CIS at ING Groep NV in Moscow, said in e-mailed comments.

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