Bloomberg News

Ruble Drops First Day in Three on Japan Deficit, Greece Talks

August 22, 2012

The ruble depreciated against the dollar for the first time in three days as Japan’s trade deficit widened more than expected and Greece sought more time on policy changes, cutting investor appetite for riskier assets.

The Russian currency weakened 0.5 percent versus the dollar to 31.8849 by the close in Moscow and fell 0.4 percent against the euro to a three-week low of 39.7399. It slid 0.5 percent against the central bank’s currency basket, which is 55 percent dollars and 45 percent euros, to 35.4197.

Japan’s trade deficit widened to 517.4 billion yen ($6.5 billion) in July, compared with the 270 billion-yen median forecast of 28 analysts in a Bloomberg News survey. Greece asked for more time to carry out policy changes and Prime Minister Antonis Samaras said his country needs “more air to breathe” in dealing with its debt crisis

“Wider-than-expected trade deficit reported by Japan decreases investor appetite for risky assets including the ruble,” said Andrey Volkov, head of foreign exchange and money markets at ZAO Natixis Bank in Moscow.

Investors increased bets on the ruble weakening against the dollar, with non-deliverable forwards showing the currency at 32.3848 in three months versus 32.2714 on Aug. 21.

The extra yield investors demand to own Russia’s dollar bonds over U.S. Treasuries rose two basis points to 216, according to JPMorgan Chase & Co.’s EMBI Global Index. Yields on the government’s ruble bonds due April 2021 rose three basis points to 7.86 percent, data compiled by Bloomberg show.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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