The ruble touched a record-low; weighed by declining oil prices and concern the Federal Reserve may tighten policy, drawing away capital from emerging markets.
The currency fell 0.7 percent to trade at 38.67 per dollar as of 6:59 p.m. Moscow time. The Micex Index plunged for the fourth straight day, declining 1.3 percent to steady at 1,412.83. Brent crude’s fell under $100 per barrel in September, hurting the ruble as Russia finances half its budget using oil and natural gas revenue.
Oil prices tumbled 1.4 percent on Monday to $97.05 per barrel, as speculation on when the Fed will increase its key rate weighed on investor confidence.
“Oil is falling and that’s pressuring the ruble,” Maxim Korovin, a Moscow-based fixed-income analyst at VTB Capital, told Bloomberg News. “A combination of declining oil and investors’ switch into dollar assets on expectations of the Fed’s tightening monetary policy are weighing on the currency.”
The ruble depreciated 0.3 percent versus the euro and plunged 0.5 percent to 43.5944 versus the central bank’s benchmark euro-dollar basket. This is closer to 44.40 rubles, a level that would prompt the central bank to intervene.
Yield on Russia’s bonds that mature in February 2027 declined three basis points, or 0.03 percentage point, to 9.54 percent after earlier appreciating at least 110 basis points ever since Russia invaded Crimea in March.
Meanwhile, the Brazil’s real dropped on fears that China may not boost stimulus and on speculation that President Dilma Rousseff may stand a chance in her re-election bid.
The real plunged 1 percent to trade at 2.3913 per U.S. dollar as of 1:59 p.m. Sao Paulo time, its lowest level since Feb. 19. Recently, the currency has appreciated on bets that a new administration will enact favorable policies to boost economic growth. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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