Russia’s central bank started its first intervention to support the ruble since January after the currency depreciated beyond a target level today, according to OAO Rosbank (ROSB), the Russian unit of Societe Generale SA. (GLE)
The ruble depreciated 0.6 percent to 35.6411 against the dollar-euro basket by the close in Moscow, after earlier declining to as weak as 35.6801.
The central bank was forced to support the ruble after it weakened past the 35.65 level, Vladimir Kolychev, Rosbank’s Moscow-based chief economist, said by e-mail. Bank Rossii is required to sell $100 million to $150 million a day to slow the ruble’s decline, he said. The central bank’s press office, which didn’t immediately reply to an e-mailed request for comment, has said its policy isn’t to comment on interventions.
The currency of the world’s biggest energy exporter has come under pressure as the threat of Greece leaving the euro and slowing growth in China sent Urals crude to a four-month low. The ruble has fallen 8.2 percent since April, a sharper drop than the currencies of China, Brazil and India, and is headed for the biggest monthly decline since September.
“If stresses on the global markets continue to rise and oil continues to fall the first intervention level will not be a major support,” Kolychev said. “It’s all about the global picture and Europe in particular.”
Urals crude, Russia’s main export, traded little changed at $104.83 per barrel, seven cents above its lowest closing price this year. The ruble lost 0.9 percent to 32.034 per dollar, depreciating beyond 32 for the first time since January. It fell 0.3 percent to 40.05 per euro.
Bank Rossii manages the ruble within a so-called “floating corridor” against a basket of dollars and euros to limit swings that erode exporters’ competitiveness. The Russian currency will be allowed to trade freely in two years’ time, First Deputy Chairman Alexei Ulyukayev said in an April 18 interview.
Russia’s 140 billion rubles ($4.4 billion) of domestic bonds due August 2016 were little changed, leaving the yield steady at 8 percent. The yield on the country’s only ruble- denominated Eurobond gained three basis points to 7.244 percent.
Russian dollar Eurobonds due 2015 fell, increasing the yield by one basis point to 2.313. Similar-maturity Eurobonds issued by OAO Sberbank, Russia’s largest lender, yielded five basis points less than yesterday at 3.811 percent, while the yield on 2015 dollar debt from state gas monopoly OAO Gazprom declined three basis points to 3.783 percent.
Investors increased bets on the ruble weakening, with non- deliverable forwards showing the currency at 32.5169 per dollar in three months, compared with expectations of 31.7289 per dollar yesterday. The cost of insuring Russian bonds against default over five years with credit default swaps rose seven basis points, or 0.07 percentage point, to 251 basis points, heading for the highest closing level since Jan. 18.
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