BLBG:Ruble Declines for Third Day on Crude Oil, U.S. Budget Talks
The ruble declined for a third day as oil, Russia’s chief export earner, fell and concern the U.S. deficit will slow growth curbed investor appetite for riskier assets.
The ruble depreciated 0.1 percent to 30.9150 against the dollar at 1:46 p.m. in Moscow, poised for the longest losing streak in more than a month. The national currency weakened 0.3 percent versus the central bank’s euro-dollar target basket and depreciated 0.3 percent against the euro to 40.4150.
Oil fell 0.1 percent to $89.02 per dollar in New York. Crude and natural gas account for about 50 percent of Russian government revenue. The U.S. Institute for Supply Management’s factory index unexpectedly contracted in November, falling to the lowest level since July 2009. President Barack Obama’s administration rejected a Republican plan for tackling the U.S. fiscal cliff as it didn’t include higher tax rates for top- earning Americans, something the president has called essential.
The ruble’s decline reflects “weaker oil prices and more generally, softer risk sentiment amid disappointing ISM data as well as ongoing fiscal cliff negotiations,” Vladimir Kolychev, head of research at Societe Generale SA’s OAO Rosbank (ROSB) unit in Moscow, said by e-mail.
Obama’s proposed framework calls for $1.6 trillion in tax increases, $350 billion in cuts in health programs, $250 billion in cuts in other programs and $800 billion in assumed savings from the wind-down of the wars in Iraq and Afghanistan, according to administration officials.
Cliff Solved
“We expect the U.S. fiscal cliff to be solved by the year end and it will boost global sentiment,” Ivan Sinelnikov, an economist at OAO Gazprombank in Moscow, said by e-mail. “Russia will be among beneficiaries of that process,” said Sinelnikov, who sees the ruble at 30 to 30.5 against the dollar at the end of the year.
Non-deliverable forwards showed the ruble at 31.3762 per dollar in three months compared with 31.3290 yesterday.
The extra yield investors demand to own Russia’s dollar bonds over U.S. Treasuries fell one basis point to 188, according to JPMorgan Chase & Co.’s EMBI Global Index. An index of five-year government bond yields advanced three basis points to 6.5554 percent.
To contact the reporter on this story: Lyubov Pronina in London at lpronina@bloomberg.net
To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net
