Tags: Russia | ruble | currency | growth

Ruble Drops to Record on Economic Growth, Muted Currency Support

Tuesday, 18 Feb 2014 01:32 PM

The ruble slid to a record as data showed economic growth in Russia is foundering and investors speculated central-bank support for the currency will diminish.

The ruble lost 0.9 percent to 41.4353 against Bank Rossii’s target basket of dollars and euros.

Policymakers from India to South Africa have lifted borrowing costs to slow currency declines. Russia’s industrial production contracted in January, missing the forecast for 1 percent growth in a Bloomberg survey, data showed yesterday. That reduces the chances of an interest-rate increase in response to the weaker currency, HSBC Holdings Plc analysts Alexander Morozov and Artem Biryukov said in an e-mailed note Feb. 17. The Finance Ministry announced today its plan to buy foreign exchange from the central bank.

“The ruble is now one of the most disliked currencies,” Denis Korshilov, the head of fixed income, currencies and commodities, at ZAO Citibank in Moscow, said in e-mailed comments. “The macro is bad, rates won’t be hiked, while liquidity for speculators is good.”

The ministry will buy foreign currency equivalent to 3.5 billion rubles from the central bank, which will decrease its interventions by the same amount, on a daily basis from Feb. 20 until the end of May, the ministry said in an e-mailed statement. The decision will have no impact on the ruble, Deputy Finance Minister Alexey Moiseev said in Moscow today, adding the transactions will help improve liquidity in the banking industry.

The ruble weakened 0.6 percent against the dollar to 35.4465 and lost 1 percent to 48.7550 per euro. The ruble has slid 6.8 percent since the beginning of the year against the dollar, the second-worst performance among 24 emerging-market currencies tracked by Bloomberg.

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The ruble slid to a record as data showed economic growth in Russia is foundering and investors speculated central-bank support for the currency will diminish.
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2014-32-18
Tuesday, 18 Feb 2014 01:32 PM
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