Bloomberg News

Ruble Weakens Most in a Month on Falling Oil, Rosneft Bets

October 23, 2012

The ruble fell the most in a month as oil declined for a fourth day and amid expectations that OAO Rosneft’s purchase of TNK-BP will boost demand for dollars.

The ruble depreciated 1.2 percent to 31.4435 against the dollar at 7 p.m. in Moscow, the most since Sept. 26 on a closing basis. The currency fell 0.4 percent versus the euro at 40.7500. It was down 0.8 percent against the central bank’s euro-dollar target basket at 35.6314.

Crude, Russia’s chief export earner, slumped 2.6 percent to $86.30 a barrel in New York, heading for the lowest close in three month. Rosneft agreed to buy BP Plc (BP/)’s half of the TNK-BP oil venture for $26.8 billion in cash and shares and has a preliminary accord to acquire the other half from its billionaire partners for $28 billion in cash.

The ruble was affected by the sharp oil decline and uncertainty about “the scale of the effect the deal might have on the spot market,” Dmitry Polevoy, a Moscow-based economist at ING Groep NV, said by e-mail. “It forced some players to start cutting earlier long-ruble positions.”

Non-deliverable forwards showed the ruble at 31.9235 per dollar in three months compared with 31.5390 yesterday.

“The fear on the part of some investors” that some ongoing acquisitions may have foreign-exchange market implications is driving ruble weakness, Societe Generale SA said in an e-mailed note today said. “Our view is that these fears are largely overdone.”

Societe Generale recommended buying the currency against the basket, with a target of 33.60 .

The extra yield that investors demand to own Russia’s dollar bonds over U.S. Treasuries rose seven basis points 180, according to JPMorgan Chase & Co.’s EMBI Global Index. An index of five-year government bond yields added 11 basis points to 7.1116 percent.

To contact the reporter on this story: Lyubov Pronina in London at lpronina@bloomberg.net

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


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