Ruble Worst-Hit in Developing World Selloff Sparked by China

  • Currency hurt by sentiment on global markets and crude: Nomura
  • Trading closed in Russia on Thursday, Friday for holiday

The ruble dropped most among emerging-market currencies as tumbling oil prices exacerbated a selloff in riskier assets hit by China’s decision to let the yuan slip to a five-year low.

Russia’s currency fell 1.9 percent to 74.6555 against the dollar by 5:34 p.m. in Moscow, heading for a record close and bringing its loss in the last 12 months to almost 18 percent. Brent crude, used to price the nation’s main export blend, declined 4.4 percent to $34.78 a barrel, an 11-year low.

Analysts from Citigroup Inc. to UBS Group AG predict crude will near $30 in the coming months as U.S. government data to be released today is forecast to show crude supplies outstripping demand. In China, the central bank set the yuan’s reference rate at an unexpectedly weak level, sending emerging-market stocks and currencies lower.

“This is a double-hit for the ruble -- a combination of risk-off sentiment due
to China and the oil price making new lows,” said Dmitri Petrov, an analyst at
Nomura International Plc in London. “Still, the ruble is holding up relatively well, considering the scale of the moves.”

Five-year government notes fell, pushing the yield to 9.91 percent, the highest since Dec. 29. The Micex Index of shares retreated 0.3 percent. Markets in Russia are closed on Thursday and Friday for Orthodox Christmas.

“The selloff of the ruble throughout the holiday period amid downward pressures on oil prices suggests that inflation is unlikely to fall as sharply as previously expected,” analysts at Credit Suisse Group AG, led by Kasper Bartholdy, said Wednesday in an e-mailed report.

Russia’s statistics office is scheduled to release December consumer-price data next week. The core inflation rate will fall to 13.8 percent from 15.9 percent in November, according to a Bloomberg survey.