Ruble Extends Longest Weekly Losing Streak in Nine Years on Oil

The ruble weakened, extending the longest stretch of weekly losses since 2005, as oil trading below $80 a barrel exerts pressure on Russia’s revenue and pushes the economy closer to recession.

The currency fell 0.9 percent to 47.2235 per dollar at 7:04 p.m. in Moscow, taking the drop in the past five days to 1.2 percent. Ten-year government bond yields climbed nine basis points to a five-year high of 10.29 percent. The dollar-denominated RTS Index slumped 1.2 percent to the lowest since August 2009.

Oil’s collapse into a bear market has put pressure on Russia’s finances as the world’s largest energy exporter gets about 50 percent of state revenue from crude and gas industries. The ruble’s 10th straight week of retreats is helping offset the blow because the weaker currency boosts the country’s energy proceeds in local-currency terms. WTI headed for the longest run of weekly drops in almost three decades.

“The ruble’s move today has everything to do with the oil slide,” Luis Costa, a strategist at Citigroup Inc. in London, said by e-mail. “Horrible timing for that to happen, amidst a significant shortage in internal dollar funding. It’s very difficult for the ruble to recover in an environment like that.”

While crude erased an earlier 1.5 percent drop in London, it’s still trading under $80 a barrel for the second day. Russia’s central bank eliminated its target ruble band this week to allow the exchange rate to trade freely, abandoning a policy that required it to intervene in the currency market each time the ruble crossed the lower boundary.

‘Scaring Traders’

The Bank of Russia has refrained from stepping in since saying a week ago it was prepared to increase interventions “at any moment” to shore up the ruble. That’s helping to conserve foreign-currency reserves after 12 straight weeks of declines took them to a five-year low of $421 billion on Nov. 7.

This week’s drop for the ruble is set to be the smallest since the five days ending Oct. 17.

“Oil below $80 is scaring the ruble traders,” Sergey Fishgoyt, the deputy head of foreign-exchange trading at OAO Bank Otkritie, said by e-mail. “The central bank isn’t in a hurry to fulfill its promises” to bolster the currency, he said.

The Micex Index of equities added 0.6 percent as OAO Novatek gained 2.9 percent. Seventy percent of the gauge’s 50 members traded above their 50-day moving average yesterday as oil’s drop boosted exporters.

AFK Sistema slumped 2.4 percent as a Moscow court today extended the house arrest of its owner Russian billionaire Vladimir Evtushenkov.

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