Report: Ruble declines on oil as Sberbank sees 'sharply' lower currency

MOSCOW, Jan 11 (PRIME) -- Russia’s currency extended its worst start to a year since 2009 as the price of oil fell and Sberbank CIB said a disparity with the price of crude argues for it to be “sharply” lower, Bloomberg reported on Monday.

The ruble declined 1% to 75.4850 against the dollar by 12:30 p.m. in Moscow, the weakest on record based on closing prices. Brent in rubles dropped 1.4% to 2,471.7, the lowest since 2010 as the benchmark used to price the nation’s main export blend retreated 3% to U.S. $32.54 a barrel, an 11-year low. Trading was closed in Russia on Thursday and Friday for public holidays.

Data showing Chinese producer prices fell for a record 46 months fueled concern of further weakness in the world’s biggest energy consumer. Russia receives about half of its budget revenue from oil and natural gas sales. While the ruble is the second-worst performing emerging currency over the past six months with a drop of 26%, it hasn’t kept up with a 45% decline in the price of Brent, spurring concern the country won’t be able to contain its budget deficit.

“The story is unchanged with oil prices seeking a base level and the ruble following,” said Tom Levinson, senior foreign-currency and rates analyst at Sberbank in Moscow. “If anything the relative resilience of the ruble to lower Brent prices argues for the ruble against the dollar to be sharply beyond 75."

YIELDS FALL

Five-year government notes fell, pushing up the yield to 9.97%. The MICEX Index of shares retreated 2.3% after rising 26% last year.

“Rapidly escalating concerns about China continue to exert downside pressure on commodities and keep the short-term upside bias intact in the dollar-ruble pair,” said Piotr Matys, a strategist for emerging-market currencies at Rabobank in London. “At current levels we may hear verbal intervention from the central bank officials followed by direct foreign currency intervention" if the trend continues, he said.

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