Russia’s ruble weakened against the dollar and the euro as the sliding price of oil deepened concerns the world’s largest energy-exporting economy will slow further. The currency dropped 0.3 percent to 34.8001 per dollar by 11:17 a.m. in Moscow, paring last week’s 3 percent advance. It weakened 0.5 percent to 39.4437 versus the dollar-euro basket used to manage fluctuations, still within the 41 threshold the central bank pledged in January to defend, unless oil prices dropped to $30 a barrel and stayed there. “Today’s decline in the ruble is directly related to weaker oil,” said Stanislav Ponomarenko, chief economist in Moscow at ING Groep NV. “Oil is a fundamental of the Russian economy and currency, so when it goes lower that’s viewed as significant by investors.” Urals crude, Russia’s chief oil export blend, slumped 65 percent since August and the ruble slid 33 percent against the dollar as the worst global economic crisis since the Great Depression crimped demand and froze credit. The economy may contract 2.2 percent this year as Urals trades at an average price of $41 a barrel, according to the government. The budget deficit may exceed 8 percent of gross domestic product, Finance Minister Alexei Kudrin said March 13. Crude prices on the New York Mercantile Exchange slipped 5.2 percent to $43.83 a barrel today, after the Organization of Petroleum Exporting Countries, or OPEC, backed away from their fourth production cut since September amid concern it will exacerbate the worldwide economic slowdown. Oil is Russia’s biggest export earner. Halting Devaluation The ruble lost 0.6 percent to 45.1179 per euro today, after gaining 0.9 percent in the week to March 13. The central bank manages the ruble against the basket, which is made up of about 55 percent dollars and the rest euros, to contain currency fluctuations that hurt exporters. Bank Rossii halted the ruble’s so-called “gradual devaluation” on Jan. 22, saying it would use higher interest rates, curbs to bank refinancing and foreign-exchange reserves to prevent further depreciation of the currency. The central bank, which helped drain 36 percent of Russia’s reserves since August stemming the ruble’s drop, hasn’t been selling any foreign currency, Chairman Sergey Ignatiev said last week. “Given that it’s been almost a free float over the past month and a half, the ruble has really revealed itself as a true commodity currency,” said ING’s Ponomarenko. The ruble may slide a further 5 percent versus the basket by early next year as increased government spending stokes inflation, he added. Inflation Outlook The ruble dropped 11 percent versus the dollar last month, the so-called real exchange rate that excludes the effects of inflation, as consumer prices hit a four-month high of 13.9 percent. Inflation may be as fast as 14 percent this year, Kudrin said Feb. 14, according to the Interfax newswire. Russian government bonds declined today, with the 30-year dollar bonds snapping a four-day advance. The yield on the notes rose 6 basis points to 8.75 percent, and the yield on the 12.75 percent bond maturing 2028 gained 5 points to 9.36 percent. Bond yields move inversely to their prices. The Micex stock index fell 0.9 percent to 742.57 today.

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