Bloomberg News

Ruble Declines to Week Low Versus Dollar on European Growth Woes

September 01, 2011

Sept. 1 (Bloomberg) -- The ruble fell to the lowest level in more than a week against the dollar as concern deepened that European economies are slowing.

Russia’s currency lost 0.5 percent to 29 per dollar at the 7 p.m. close in Moscow, the weakest closing level since Aug. 23.

The euro depreciated against 15 of its 16 major peers as a report showed European manufacturing contracted more than initially estimated in August and investors speculated the European Central Bank was supporting the debt market.

“Weak data” and “rumors regarding renewed ECB bond purchases are weighing on the euro,” Carolin Hecht, a currency strategist at Commerzbank AG in Frankfurt, said by e-mail.

The ECB bought Italian securities today, according to two people with knowledge of the transactions, who declined to be identified because the purchases are confidential. A spokesman for the ECB declined to comment.

Non-deliverable forwards showed the ruble at 29.2992 per dollar in three months, compared with 29.3025 yesterday. The contracts provide a guide to expectations of currency movements and interest-rate differentials and allow companies to hedge against currency shifts.

The ruble depreciated 4.2 percent against the dollar in August, the worst performance among its three peers in the so- called BRIC group of emerging-market countries. Brazil’s real fell 2.5 percent against the greenback, India’s rupee slipped 4.1 percent and China’s yuan appreciated 0.9 percent.

The ruble was 0.7 percent stronger at 41.27 per euro, leaving it steady at 34.5215 against the central bank’s target dollar-euro basket.

Russia’s dollar bonds due 2020 rose for a sixth day, pushing the yield down six basis points, or 0.06 percentage point, to 4.146 percent. The country’s ruble Eurobond yielded the same as yesterday, at 6.909 percent.

--Editors: Alex Nicholson, Linda Shen

To contact the reporter on this story: Jack Jordan in Moscow at jjordan22@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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