Bloomberg News

Ruble Drops for Fifth Day to Dollar as Europe Hits Oil Demand

October 04, 2011

Oct. 4 (Bloomberg) -- The ruble depreciated against the dollar for a fifth day, heading for the weakest close in more than two years, on concern Europe’s debt crisis will hurt demand for oil, Russia’s chief export earner.

Russia’s currency depreciated 0.4 percent to 32.715 per dollar at the 7 p.m. close in Moscow, its weakest closing position since July 2009. It was 0.4 percent weaker at 43.4722 per euro, leaving it also down 0.4 percent at 37.56 against the central bank’s target dollar-euro basket.

Crude futures dropped for a third day in New York, losing 0.9 percent to $76.85 per barrel, as European leaders indicated that investors may have to take bigger losses than previously assumed on Greek debt and Goldman Sachs Group Inc. cut its growth forecast for Japan. Urals crude, the main Russian blend, closed below $100 a barrel yesterday for the first time since Feb. 15.

“Russia remains an oil play, and with commodity prices vulnerable we see further weakness ahead for the ruble,” Win Thin, the global head of emerging-markets currency strategy at Brown Brothers Harriman & Co. in New York, wrote in an e-mailed research note.

Investors increased bets the ruble will depreciate further, with non-deliverable forwards showing it dropping to 33.3402 per dollar in three months’ time, compared with 33.1485 yesterday. NDFs provide a guide to expectations of currency movements and interest-rate differentials.

Russia’s only ruble Eurobond fell, pushing the yield up 39 basis points to 8.815 percent. The yield on Russia’s sovereign dollar bonds due in 2020 climbed nine basis points to 5.456 percent.

--Editors: Chris Peterson, Ana Monteiro

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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