Ruble Starts New Year With Plunge as Oil Declines to 2009 Low

The ruble picked up right where it left off last year, weakening as oil prices extended declines.

Russia’s currency slid 7.2 percent to 60.37 per dollar at 8:06 p.m. in Moscow, in its first day of trading of 2015 after a 46 percent decline last year. Government bonds fell, with the five-year yield climbing 16 basis points to 15.63 percent. The Micex Index of stocks rose 2.8 percent to 1,435.66 at the close.

The currency of the world’s largest energy exporter is under pressure as the price of crude retreats. Brent fell to $53.14 per barrel in London today, the lowest level since May 2009, while front-month WTI fell below $50 a barrel. The ruble’s slide has been exacerbated by stalling economic growth, triggered by U.S. and European Union sanctions linked to the Ukraine conflict.

“The ruble enters 2015 with a huge challenge as nothing supportive for the currency is yet visible,” Vladimir Miklashevsky, a strategist at Danske Bank A/S in Helsinki, said by e-mail today. Falling commodities prices and investors shifting from emerging markets to the U.S. dollar make the “prospects for ruble assets rather gloomy,” he said.

Trading in the dollar-ruble spot market on the Moscow Exchange fell, reflecting national holidays. About $561 million changed hands, compared with a daily average of $4.8 billion in the past 12 months.

Russia’s economy may shrink as much as 4.7 percent this year if oil averages $60 a barrel under a “stress scenario,” the central bank said in December. Net capital outflows may have reached $134 billion in 2014, central bank data show.

Overnight ruble deposit rates dropped to 16.75 percent from 17.3754 on Dec. 30, dipping below the central bank’s main interest rate for the first time since a surprise 6.5 percentage-point increase on Dec. 16 left the benchmark rate at 17 percent.

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