Bloomberg News

Ruble Slides Versus Dollar as U.S. Budget Woes Pare Risk Bets

November 08, 2012

Russia’s ruble slid to the lowest in almost two weeks on concern Europe’s debt crisis and wrangling over the U.S. deficit will hurt the world’s biggest energy exporter.

The ruble tumbled as much as 0.4 percent and closed down 0.1 percent at 31.5 per dollar by the close in Moscow, the weakest since Oct. 29. The currency lost 0.1 percent to 40.16 versus the euro and declined 0.1 percent versus the central bank’s euro-dollar basket.

The European Commission cut its growth forecast for the euro area yesterday and European Central Bank President Mario Draghi said the debt crisis is starting to “affect the German economy,” Europe’s largest. The central bank stands ready to boost Europe with bond purchases to avoid “extreme scenarios,” he said today. In the U.S., Barack Obama, who was re-elected president yesterday, now faces negotiations to avoid more than $600 billion of automatic tax increases and spending cuts.

“Russia is highly geared on global growth with its dependence on commodities,” Barbara Nestor, emerging-markets strategist at Commerzbank AG in London, said by e-mail. The ruble is “mostly trading on the back of global problems, such as U.S. policies and the projected slowdown in the Eurozone, in particular in Germany,” she said.

The ruble has depreciated 8.1 percent from this year’s strongest level of 28.9925 per dollar reached on March 26 when Urals oil traded $2.74 off a high of $109.77 a barrel, data compiled by Bloomberg show. Urals, Russia’s export blend of crude, was up 0.6 percent at $106.41 a barrel. Oil pared its steepest decline this year, adding 1.1 percent to $85.34 a barrel in New York.

Non-deliverable forwards showed the ruble at 31.987 per dollar in three months. The extra yield investors demand to own Russia’s dollar bonds over U.S. Treasuries fell two basis points to 188, according to JPMorgan Chase & Co.’s EMBI Global Index.

Bank Rossii plans to review interest rates tomorrow. The regulator will probably leave the refinancing rate on hold at 8.25 percent, according to a median estimate of 23 economists surveyed by Bloomberg.

To contact the reporters on this story: Alex Nicholson in Moscow at anicholson6@bloomberg.net; Maria Levitov in London at mlevitov@bloomberg.net

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


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