Report: Ruble leads emerging-market decline as Iran pushes oil under $28

MOSCOW, Jan 18 (PRIME) -- The ruble slumped the most among emerging-market peers as investors sold the currency of the world’s biggest energy exporter amid concern Iranian crude deliveries will extend an oil-market rout, Bloomberg reported on Monday.

Russia relies on the oil and natural gas industries for almost half its budget revenue and collapsing crude prices have weakened the ruble 6.6% versus the dollar this year, the most among developing nations after South Africa’s rand. The Russian currency retreated 1.2% to 78.5650 against the dollar by 11:16 a.m. in Moscow, its lowest intraday level since Dec. 16, 2014, when falling energy prices and the conflict in Ukraine drove the ruble to a record low.

The lifting of international sanctions on Iran has helped raise the correlation between Brent and the ruble toward its strongest since October. Crude sank below U.S. $28 per barrel on Monday, extending declines and trading at a 12-year low. Trading will be more volatile today because of public holidays in the U.S., according to Danske Bank A/S.

While Iran’s return to the market is “broadly priced in,” a “big question is how much Iran is able to deliver in the mid-run," Vladimir Miklashevsky, strategist at Danske, said in e-mailed comments. “With the U.S. closed today the ruble market will stay rather thin and volatile.”

Russia’s budget for 2016 is based on $50-per-barrel oil and President Vladimir Putin’s government is weighing austerity measures to counter shrinking revenue. It will take at least 12 to 18 months for a balance between supply and demand on the oil market to return, RIA Novosti reported on Sunday, citing Energy Minister Alexander Novak.

Government bonds dropped for a third day, lifting the yield on five-year notes 7 basis points to 10.84%. The benchmark MICEX Index of Russian stocks rose 0.6%, climbing for the first time in four days.

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