Bloomberg News

Ruble Heads for Three-Month Low Against Dollar on Oil Price Move

December 29, 2011

Dec. 29 (Bloomberg) -- The ruble depreciated for a third day, heading for the weakest level in almost three months, after oil traded near the lowest in a week and investors closed positions before the long New Year holidays.

The Russian currency fell 1.6 percent to 32.2395 against the dollar at the close of trading in Moscow, set for its weakest closing rate since Oct. 6. The ruble slid 0.9 percent to 41.5700 versus the euro, putting it at 36.4382 against the central bank’s target dollar-euro basket.

Crude for February delivery tumbled 2 percent yesterday after a report showed U.S. fuel stockpiles surged, indicating demand may be weakening. It was down 0.7 percent at $98.63 a barrel today, trading near its lowest since Dec.20. While the ruble and stocks trading in Russia next year resumes Jan. 3, traders are closing their positions ahead of the country’s New Year and Christmas national holidays than run between Jan. 1 and Jan. 9.

“This looks like position squaring before a long break,” Dmitry Dudkin, a fixed-income analyst at UralSib Financial Corp. said by e-mail. “Investors fear the possible problems over New Year holidays coming from Europe and want to limit their exposure.”

The ruble weakened in the final week of each year since 2008, according to data compiled by Bloomberg. The Russian currency is 5.2 percent lower against the dollar this year.

Investors increased bets the ruble will weaken further, with non-deliverable forwards showing the currency at 32.6726 per dollar in three months, compared with expectations of 32.2247 per dollar yesterday. The contracts are a guide to expectations of currency movements as they allow investors and companies to fix the exchange rate at a particular level in the future.

Russia’s dollar-denominated Eurobonds due in 2020 rose, pushing the yield three basis points, or 0.03 percentage point, lower to 4.55 percent.

--Editors: Ash Kumar, Linda Shen

-0- Dec/29/2011 16:17 GMT

-0- Dec/29/2011 17:04 GMT

To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net

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


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