Russia Spending $6 Billion Not Enough to Stop Ruble Rout on Oil
By Vladimir Kuznetsov Oct 13, 2014 6:22 AM ET
The ruble extended its longest losing streak in more than a year as $6 billion of Russian currency interventions failed to stem the depreciation amid tumbling oil prices.
The ruble weakened 0.5 percent versus the dollar-euro basket to 45.2911 by 1:50 p.m. in Moscow, taking its seven-day decline to 2.2 percent, the longest stretch of losses since the nine days ended Aug. 1, 2013. Oil, which along with natural gas contributes almost half of Russia’s revenue, fell 2.4 percent to $88.08 per barrel in London, the lowest since December 2010.
Russia’s central bank intervened in the past 10 days to stabilize the ruble, central bank Governor Elvira Nabiullina told lawmakers in Moscow today. The action, which comes as President Vladimir Putin orders a withdrawal of Russian forces from Ukraine’s border, has so far failed to halt the ruble’s decline amid a domestic foreign currency shortage stemming from sanctions. The cost of swapping rubles into dollars widened to a record.
“The main driver for the ruble right now is the oil price,” Dmitry Polevoy, the chief economist for Russia at ING Groep NV, said in e-an e-mailed note. Crude’s decline “totally eclipses” the “reassuring news” that Russia announced it was pulling back forces from Ukraine’s borders, he said.
The ruble slid 0.8 percent to a record 51.2655 versus the euro and lost 0.2 percent to 40.4005 against the dollar.
The monetary authority, which releases the amount of its interventions with a two-day lag, spent $866 million of foreign currency on Oct. 9 and moved the upper band of its target dollar-euro basket by 25 kopeks to 45.25 on Oct. 10, according to data on its website today. It probably sold about $2 billion in the currency market that day as the ruble weakened further past 40 per dollar, according to estimates by Alfa Bank.
more:
http://www.bloomberg.com/news/2014-10-13/russia-interventions-top-4-billion-as-crude-drop-worsens-rout.html
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