Ruble Drops to New Lows on Central Bank’s Intervention

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Ruble Drops to New Lows on Central Bank’s InterventionThe ruble fell to a record-low for the third day, leading to speculation the Bank of Russia rolled out measures to curb losses due to the falling oil prices.

The ruble dropped by up to 6.6 percent to 53.95, its lowest level since pre-2003, before easing 3.6 percent weaker to 51.8905 at 6:22 p.m. Moscow time. Some analysts thought the pattern of the rebound was consistent with a speedy selloff of foreign currency.

“The ruble seems to be chasing the oil price,” Artem Roschin, a Moscow-based foreign-exchange dealer at Aljba Alliance, told Bloomberg News. “As long as the oil price continues to fall, the ruble will weaken.”

The Brent crude prices set for January plunged up to 3.7 percent to trade at $67.53 per barrel, before later rising 1.6 percent to $71.26 in Britain. The Organization of Petroleum-Exporting Countries retained its crude output estimates when it concluded its meeting on Nov. 27.

The decision to allow the ruble to decline improves export revenue on local-currency terms, which helps curb the impact of lower crude prices. Russia, which is dependent on energy exports to finance 50 percent of its budget revenue, saw budget surplus surge 85 percent in the 10 months through October to 1.13 trillion rubles ($21 billion).

The ruble’s three-month implied volatility rose 5.5 percentage points to steady at 32.11 percent, the highest level in six years.

Meanwhile, the Brazil’s real rose nearly 0.1 percent to trade at 2.5643 per dollar as of 2:30 p.m. Sao Paulo time after foreign-exchange swaps were rolled over. The real had earlier declined 0.6 percent early on Monday. Swap rates, which measure forecasts for swings in interest rates, rose 0.14 percentage point to 12.32 percent for the contract that matures in January 2017. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com