BLBG:Ruble Has Longest Losing Streak Against Target Basket Since 2009 on Crude
The ruble declined for a ninth day against the central bank’s target dollar-euro basket, its longest stretch of declines since February 2009, as oil fell.
The ruble depreciated 0.2 percent to 36.6412 versus the basket as of 10:35 a.m. in Moscow, the lowest level since December 2009. The ruble sank 0.2 percent to 31.4305 per dollar and lost 0.1 percent to 43 per euro.
Oil dropped 0.2 percent to $86.74 a barrel after the American Petroleum Institute said supplies rose last week, a sign demand for the commodity from the world’s largest crude consumer may decline. The ruble has slumped almost 5 percent against the basket since Sept. 8 as investors pared bets on riskier assets amid concern a possible default by Greece will push the global economy into recession.
The central bank uses the basket to smooth currency movements that can hurt exporters. The regulator sells more dollars and euros the closer the ruble gets to the weaker end of a so-called floating corridor that currently stands at 32.15 to 37.15 rubles.
The central bank drained more than $200 billion, or about a third of the country’s international reserves, in the six months through January 2009 to stem a 35 percent devaluation of the ruble to the dollar.
“The central bank is now selling dollars and buying rubles to lean against the wind,” Ivan Tchakarov, Moscow-based chief economist at Renaissance Capital, said by e-mail yesterday. “The closer the ruble-basket rate moves towards the upper end of the band, the more the bank will intervene.”
Cost of Protection
Urals crude oil, Russia’s main export blend, lost 4.8 percent to $111.60 a barrel yesterday, the biggest daily drop since Aug. 8. The blend has lost 9.2 percent since reaching this year’s peak of $122.88 a barrel April 4.
The cost of protecting Russian debt against non-payment for five years using credit-default swaps climbed three basis points to 232 yesterday, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market. That’s the highest level since September 2009 based on closing prices, the data show.
The contracts pay the buyer face value in exchange for the underlying securities, or the cash equivalent, should a government or company fail to adhere to its debt agreements.
The ruble could recoup some of its losses if the U.S. Federal Open Market Committee announces steps to boost the economy, Chris Weafer, chief strategist at Troika Dialog, Russia’s oldest investment bank, wrote in an e-mailed note.
“The recent sharp decline in the ruble against both the dollar and the euro is an overreaction to oil-price fears,” he said.
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
