The ruble headed for its third weekly loss against the dollar as concern Europe’s debt crisis will worsen hurt demand for riskier emerging-market assets. Russia’s currency lost 0.4 percent to 30.5177 versus the dollar as of 12:28 p.m. in Moscow, taking its weekly drop to 1.9 percent. The ruble was little changed at 42.0923 against the euro, leaving it down 0.2 percent at 35.7275 against the central bank’s dollar-euro target basket, its sixth day of declines. The euro snapped a two-day gain versus the dollar and yen after Finnish Finance Minister Jutta Urpilainen said it was unlikely any agreement on collateral for a Greek bailout would be reached at a meeting of European officials today. Greek bonds maturing in two years yielded 50.4 percent today, compared with a yield of 6.2 percent on similar-maturity Russian debt. “While the ruble has weakened markedly in recent days, there is potential for more sell-off,” Benoit Anne, head of global emerging-markets strategy at Societe Generale SA in London, said by e-mail. “The next big level is 36 against the basket, and we could get there quickly if the relief rally that we saw yesterday turns out to be short-lived.” Markets rallied yesterday after the European Central Bank said it will coordinate with the Federal Reserve and other central banks to conduct three separate dollar liquidity operations to ensure lenders have enough of the currency through the end of the year. Ruble Weakness The ECB’s decision is “not a big deal for now” for the ruble, Anne said. The European crisis will probably remain the biggest driver of ruble weakness for the rest of the year, he said. BNP Paribas SA, France’s biggest lender, expects the currency to weaken as much as 0.8 percent to 36 against the basket by the end of 2011, Dina Ahmad, a foreign-exchange and rates strategist at BNP Paribas SA in London, said by phone. “It’s the combination of weaker oil prices and expected capital outflows with the elections that’s driving our bearishness on the ruble,” she said. BNP Paribas now expects investors to withdraw $45 billion from Russia this year, up from $30 billion previously, as uncertainty over who will run for president spurs outflows. Prime Minister Vladimir Putin, who handed the presidency in 2008 to his protege, Dmitry Medvedev, hasn’t ruled out a return to the Kremlin. Oil, Russia’s chief export earner, has fallen 6.5 percent so far this quarter, and traded down 0.2 percent at $89.23 per barrel today. Investors increased bets that the ruble will weaken further, with non-deliverable forwards showing it at 30.9373 per dollar in three months, compared with 30.7993 yesterday. The contracts provide a guide to expectations of currency movements and interest-rate differentials and allow companies to hedge against currency shifts. 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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