Bloomberg News

Ruble Weakens Against Dollar as Europe Downgrades Hit Brent Oil

February 15, 2012

Feb. 14 (Bloomberg) -- The ruble weakened against the dollar, paring yesterday’s gains, as Brent crude retreated and Moody’s Investors Service lowered the debt ratings of six European countries.

Russia’s currency depreciated 0.3 percent to 30.0025 per dollar at the 7 p.m. close in Moscow after strengthening 0.6 percent yesterday. The ruble was 0.2 percent stronger at 39.50 per euro and was little changed at 34.2764 against the central bank’s target dollar-euro basket.

Brent crude declined as much as 0.8 percent a barrel after Moody’s cut the debt ratings of six countries and revised its outlook to “negative” for the U.K. and France, a sign demand for Russian exports in the region may falter. Russia’s central bank may be buying foreign currencies to slow the ruble’s 7.1 percent advance against the dollar in 2012, Renaissance Capital said.

“There aren’t a lot of reasons why I would be bullish on the ruble,” Ivan Tchakarov, chief economist for Russia and the former Soviet Union at Moscow-based Renaissance, said in an interview at Bloomberg’s headquarters in New York yesterday. “We’ve reached levels where the central bank has started intervening.”

Bank Rossii manages the ruble within a so-called “floating corridor” against a basket of dollars and euros to limit swings that erode the exporters’ competitiveness. A level of 33.87 to 34.20 against the basket at the corridor’s current levels implies the regulator is buying between $50 million and $150 million a day, according to OAO Rosbank’s estimates.

Investors increased bets on the ruble weakening, with non- deliverable forwards showing the currency at 30.3817 per dollar in three months, compared with expectations of 30.278 per dollar yesterday. Government ruble bonds due June 2017 fell, pushing the yield up four basis points, or 0.04 percentage point, to 7.57 percent.

--Editors: Peter Branton, Ash Kumar

To contact the reporters on this story: Jack Jordan in Moscow at jjordan22@bloomberg.net; Zachary Tracer in New York at ztracer1@bloomberg.net

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


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