Bloomberg News

Ruble Depreciates for Fifth Day as Urals Trades at 2012 Low

May 29, 2012

The ruble fell for a fifth day against the dollar as Urals crude, Russia’s main export, traded at its lowest price this year.

The ruble dropped 0.2 percent to 32.17 per dollar by the close in Moscow, its weakest level since Dec. 29. The Russian currency lost 0.2 percent to 40.35 per euro and 35.851 against the central bank’s target dollar-euro basket.

Urals sank 1.1 percent to $104.21 per barrel. Oil and natural gas accounted for about 50 percent of Russia’s state revenue last year, according to government estimates.

“For the ruble to depreciate further it might require a further softening in global risk appetite, a decline in oil prices in particular,” Vladimir Kolychev, chief economist at OAO Rosbank (ROSB), the Moscow based unit of Societe Generale SA (GLE), said by e-mail.

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 central bank started intervening to support its currency after it weakened beyond 35.65 against the basket on May 25, Kolychev said.

Bank Rossii is selling as much as $150 million a day in foreign currencies to support the ruble, Kolychev said. The interventions will increase to as much as $250 million a day if the ruble weakens beyond 36.5 against the basket, he said.

Investors increased bets on the Russian currency weakening, with non-deliverable forwards showing the ruble at 32.697 per dollar in three months, compared with expectations of 31.872 per dollar yesterday. The ruble may fall as much as 1 percent to 32.5 per dollar this week, Mikhail Palei, a London-based currency trader at VTB Capital, said by e-mail.

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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