Ruble Falls to 6-Year Low; Russia Devalues 2nd Time in Two Days

By Emma O’Brien

Jan. 12 (Bloomberg) -- Russia’s ruble slid to the weakest level in almost six years against the dollar after the central bank devalued the currency for a second day as declining oil prices threaten to deepen the country’s economic crisis.

The ruble fell 1.7 percent to 31.0533 per dollar by 2:03 p.m. in Moscow, from 30.5312 yesterday, extending its decline to 24 percent since August. The range the ruble is allowed to trade against a basket of dollars and euros was widened, a central bank official who declined to be identified on bank policy said by telephone today. Official ruble trading began yesterday for the first time this year.

“After the long holiday the central bank’s come back intent on showing they’re still on a devaluation path,” said Ulrich Leuchtmann, head of currency strategy at Commerzbank AG in Frankfurt, which rates itself one of the top 10 traders of the ruble in the world. “With the oil price shock there is an increased burden on Russia’s current account and that necessitates a rebalancing of the currency.”

Bank Rossii devalued the currency for the 14th time since Nov. 11 as Urals crude, Russia’s main export blend, slid to $42.99 a barrel, below the $70 average required to balance this year’s budget, and the halt in gas supplies to Europe damped the outlook for export earnings. The ruble may retreat 10 percent against the basket this month as companies buy foreign currency to repay more than $80 billion of debt this year, according to Societe Generale SA, France’s second-largest bank.

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