Ruble Falls to 6-Year Low as Russia Devalues 2nd Time in 2 Days

[Enivid]

Russia’s ruble slid to the weakest level in almost six years against the dollar as the central bank devalued the currency for the second day amid declining oil prices.

The ruble fell 1.4 percent to 30.9752 per dollar by 10:47 a.m. in Moscow, from 30.5312 yesterday, extending a 25 percent decline since August. The currency weakened 1.2 percent to 35.7187 versus its target basket of dollars and euros. The range the ruble is allowed to trade within the basket was widened, a central bank official who declined to be identified on bank policy said by telephone today. Official trading began yesterday for the first time this year.

“After the long holiday the central bank’s come back intent on showing they’re still on a devaluation path,” said Ulrich Leuchtmann, head of currency strategy at Commerzbank AG in Frankfurt, which rates itself one of the top 10 traders of the ruble in the world. “With the oil price shock there is an increased burden on Russia’s current account and that necessitates a rebalancing of the currency.”

The ruble may retreat 10 percent against the basket this month as companies and banks buy foreign currency to repay more than $80 billion of debt this year, according to Societe Generale SA. Danske Bank A/S in Copenhagen sees a 15 percent drop in the ruble by year end.

The ruble traded at 41.5087 per euro, according to Bloomberg data, down 0.9 percent from 41.1317 yesterday, based on figures come from the Micex stock exchange.

Bank Rossii, the central bank, has devalued the currency 14 times since Nov. 11 as Urals crude, Russia’s main export blend, slid for a fourth day to $42.99 a barrel, below the $70 average required to balance this year’s budget. Policy makers also devalued the ruble against the basket yesterday, the official said.

The nation, which is the world’s largest energy exporter, has depleted its foreign-currency reserves by 27 percent since the start of August as the central bank sought to mitigate the currency’s slide. Investors have withdrawn more than $200 billion from Russia since then, according to BNP Paribas SA, amid the global credit-market crisis and Russia’s war with neighboring Georgia.

Russia’s currency basket is made up of about 55 percent dollars and the rest euros.

From Bloomberg News.