World () - The ruble weakened for a fourth day against the dollar after Standard & Poor’s said it may strip Germany and France of their AAA credit ratings, curbing appetite for riskier assets.
The Russian currency depreciated 0.8 percent to 31.1107 per dollar as of 1:12 p.m. in Moscow, heading for the sharpest decline since Nov. 23. The ruble was little changed at 41.605 per euro, leaving it down 0.4 percent at 35.8331 against the central bank’s target dollar-euro basket.
S&P said yesterday it put 15 euro nations on review for possible downgrades depending on the result of a European Union summit on Dec. 9, where leaders are working on a strategy to stem Europe’s debt crisis. Crude, Russia’s main export earner, lost 0.3 percent to $100.67 per barrel in New York.
Trades in the ruble currently “depend on European developments,” Denis Korshilov, head of fixed-income, currencies and commodities at Citigroup Inc. in Moscow, said by e-mail. The S&P report “cooled down some bulls, who’d started to think the Europe deal is done and we can forget about it,” he said.
The yield on French 10-year bonds rose 12 basis points, or 0.12 percentage point, to 3.252 percent today, compared with a gain of two basis points to 8.54 percent for similar-maturity Russian debt.
The ruling United Russia party won 49.5 percent of the vote in parliamentary elections Dec. 4, according to preliminary results, its worst performance since 2003. U.S. Secretary of State Hillary Clinton called for an investigation into allegations of electoral fraud and manipulation, at a gathering of the 56-nation Organization for Security Cooperation in Europe today.
Capital Outflow
“There was a marginally negative impact on the ruble” from the elections, Korshilov said. “The level of uncertainty has moved up a bit after all the discussions about falsifications and stronger protesting behavior of the population. That probably resulted in some fresh capital outflow,” he said.
Capital flight may exceed $85 billion this year, acting Finance Minister Anton Siluanov said in Moscow yesterday. Central Bank Chairman Sergey Ignatiev previously told reporters in Moscow on Nov. 2 that outflows would total $73.6 billion this year.
The ruble has lost 1.7 percent against the dollar so far in 2011, heading for a fourth consecutive yearly loss. Brazil’s real dropped 7.1 percent over the same period, India’s rupee depreciated 13 percent and the Chinese yuan gained 3.5 percent against the greenback.
Investors increased bets the ruble would weaken further, with non-deliverable forwards showing the currency at 31.535 per dollar in three months, compared with expectations of 31.3015 per dollar yesterday.
Russia’s $3.5 billion of Eurobonds due 2020 rose, pushing the yield down 16 basis points, or 0.16 percentage point, to 4.28 percent. Dollar-denominated notes due 2015 yielded four basis points less than yesterday, at 2.999 percent.
