BLBG:Ruble Extends World’s Worst 2-Week Slump As Oil Slides On China
The ruble depreciated for an eighth day, headed for the steepest two-week drop among currencies globally, as worse-than-expected Chinese data drove down the price of oil, Russia’s main export earner.
The ruble sank 0.8 percent to 33.7309 per dollar as of 12:18 a.m. in Moscow, taking its fall since May 18 to 7.4 percent. A close at that level would be its weakest since April 2009. Russia’s 28 billion rubles ($830 million) of local bonds due 2027 dropped for a fourth day, increasing the yield seven basis points, or 0.07 percentage point, to 9.09 percent.
Crude retreated 0.9 percent to $85.77 a barrel in New York after China’s Purchasing Managers’ Index fell to 50.4 in May, below the median estimate of 52 in a Bloomberg survey of 27 economists. Fitch Ratings downgraded the credit of eight Spanish regions, a sign Europe’s debt crisis is worsening.
The Chinese data “is likely to raise concerns,” Benoit Anne, head of emerging-markets strategy at Societe Generale SA in London, wrote in an e-mailed note. “We see further downside in the period ahead.”
Bank Rossii manages the ruble within a so-called “floating corridor” against a basket of dollars and euros to limit swings that erode exporters’ competitiveness. The current level against the basket implies the bank may be selling $150 million to $250 million day in other currencies to boost the Russian currency, according to Anne.
Intervention Risks
“We are going to watch for rising intervention risks,” he said. “We are still far away from the level that would trigger a much heavier intervention.”
The ruble lost 0.6 percent to 41.6704 per euro and 0.7 percent to 37.3220 against the central bank’s target basket. Investors increased bets on the ruble weakening, with non- deliverable forwards showing the currency at 34.3143 per dollar in three months, compared with expectations of 34.0665 per dollar yesterday.
The ruble may correct as much as 3.3 percent to 32.7 percent, according to Denis Korshilov, head of fixed income, currencies and commodities at Citigroup Inc. in Moscow.
“A big Russian customer order is believed to be behind this sharp move,” he said. The ruble “should correct to 32.5 to 32.7 soon after the order is done.”
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
