Bloomberg News

Ruble Extends Worst Quarterly Drop Since ‘09 on Oil Fall, Taxes

September 30, 2011

Sept. 30 (Bloomberg) -- The ruble weakened for a third day against the dollar, extending its worst quarterly depreciation since 2009 as concern over slowing European growth drove down prices for oil.

Russia’s currency depreciated 1.2 percent to 32.23 per dollar by the 7 p.m. close in Moscow. The ruble has fallen 13 percent against the greenback this quarter, the biggest drop since the three-month period ended March 31, 2009.

German retail sales declined the most in more than four years in August as concern Europe’s sovereign debt crisis will worsen sapped consumers’ willingness to spend. Urals crude oil lost 0.5 percent to $102.74 a barrel, headed for the worst quarterly drop since June 2010. Companies were due to pay about 1.5 trillion rubles ($46.7 billion) in taxes by today, Alfa Bank analysts wrote in a note Sept. 16.

“Oil prices edged weaker and the taxation period, which usually provides some support for the ruble, comes to an end,” Carolin Hecht, a currency strategist at Commerzbank AG in Frankfurt, said by e-mail.

Exporters convert dollar-denominated revenues into rubles to pay taxes at the end of each month, buoying the Russian currency. Urals has dropped 6.5 percent this quarter.

The ruble was 0.3 percent stronger at 43.29 per euro today, leaving it down 0.4 percent at 37.207 against the basket.

Ruble Target Cut

Alfa Bank cut its year-end ruble forecast 6.5 percent to 31 per dollar, citing a “deterioration of the capital account outlook,” in a research note yesterday. Capital outflows from Russia may reach $60 billion this year, compared with an earlier forecast for $50 billion, Chief Economist Natalia Orlova wrote.

“Demand for foreign currency picked up on fears that European banks will be unable to refinance Russian foreign debt,” Orlova wrote.

Russia’s current-account surplus, the broadest measure of trade in goods and services, narrowed in the second quarter to $23.8 billion from a revised $32.5 billion in the previous three months, the central bank said on its website today.

Investors increased bets the ruble will depreciate further, with non-deliverable forwards showing it dropping to 32.7998 per dollar in three months’ time, compared with 32.4355 yesterday. NDFs provide a guide to expectations of currency movements and interest-rate differentials.

Russia’s only ruble Eurobond rallied, pushing the yield down two basis points, or 0.02 percentage point, to 8.186 percent. Sovereign dollar bonds due in 2020 fell, with the yield up four basis points at 5.182 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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