MOSCOW, Dec 21 (PRIME) -- The ruble headed for its historical low on Monday as Brent crude extended its slide while Societe Generale SA said the currency is too strong relative to the price of oil, Bloomberg reported on Monday.
The ruble fell 0.3% to 71.190 as of 1 p.m. in Moscow, pushing declines into a fifth consecutive week. Brent crude dropped 0.8% to U.S. $36.57 per barrel.
The ruble, which has weakened 6.6% in December, may have further to fall because the currency hasn’t kept pace with the 19% slide in its main export earner, pressuring the state budget which gets almost 50% of its revenue from sales of oil and natural gas. Brent in rubles dropped on Monday to 2,576 per barrel, the least since 2010.
"Oil is the queen of the ball,” said Yury Tulinov, the head of research at Societe Generale’s Rosbank PJSC unit in Moscow. The currency, which closed at a record low of 71.183 on Thursday, should trade at an average 75 against the dollar if the 12-month average price of oil is $44 a barrel, he said.
The price Russia gets for oil is straining budget revenue as the government struggles to contain its biggest budget deficit in five years. JPMorgan Chase & Co. cut its 2016 outlook on Friday to anticipate a 0.2% contraction, compared with a previous forecast for growth of 0.5%. Crude traded at the lowest level since 2004 on Monday.
Government five-year bonds were unchanged to yield 10.15%. The Micex Index of shares added 0.3%.
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