Ruble Weakens 2nd Time in 3 Days Before Putin-Poroshenko Meeting

The ruble fell as Russian President Vladimir Putin prepared to meet for talks with his Ukrainian counterpart and tension flared on the nations’ border.

The currency weakened 0.2 percent to 36.1665 against the dollar as of 12:29 p.m. in Moscow, set for the second drop in three days. The ruble was down 0.2 percent at 41.3726 versus the central bank’s target dollar-euro basket, the steepest decline in a week.

Putin is set to meet Petro Poroshenko in Minsk, Belarus today to discuss the territorial conflict that has left more than 2,000 dead. Ukraine said yesterday an armored column including 10 tanks entered from Russia as the government in Moscow announced plans to send a second convoy with humanitarian aid into rebel-held Ukrainian territory.

“Geopolitical tensions over Ukraine are keeping the ruble under pressure, though investors are hoping for a diplomatic resolution of the conflict,” Moscow-based Sberbank CIB analyst Iskander Abdullaev said by e-mail.

The currency weakened 0.2 percent to 47.7050 per euro, set to end a four-day advance. The yield on benchmark ruble notes maturing February 2027 fell three basis points to 9.32 percent.

The ruble is the worst performer against the dollar among 24 emerging markets this year after the Argentinian and Chilean pesos, data compiled by Bloomberg show.

“The market has paused, awaiting the meeting between Putin and Poroshenko,” Peter Neimyshev, head of foreign exchange at Otkritie Bank, said by phone. “If there’ll be an announcement of de-escalation of military activities, the ruble may strengthen to 35.85.”

Russia’s currency fell to a five-month low last week as investors speculated the central bank’s decision to loosen its exchange-rate policy amid slowing economic growth signaled acceptance of a weaker currency. The central bank widened its trading band to 9 rubles from 7 rubles and abandoned interventions within the range on Aug. 18.

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