The ruble weakened to a record, approaching the level at which Russia’s central bank said it would step in to support the world’s worst-performing currency this quarter.
The ruble fell 1 percent to 44.3117 versus the central bank’s target basket of dollars and euros at 3:11 p.m. in Moscow. That’s within 0.2 percent of the 44.40 threshold that would prompt the monetary authority to begin buying rubles according to its policy guidelines. Ten-year government bonds retreated, lifting the yield six basis points to 9.38 percent.
Policy makers last intervened in May, bringing to $40 billion the amount Russia sold this year to counter an exodus from local assets that accelerated after President Vladimir Putin annexed Ukraine’s Crimea region in May. Russian companies are set to face dollar-funding stress as $35 billion of debt matures in December, while U.S. and European Union sanctions over the Ukraine conflict propel outflows, Morgan Stanley analysts wrote in a Sept. 26 note.
“The market is getting closer to panic,” Dmitry Polevoy, the chief economist at ING Groep NV in Moscow, said in an e-mailed note. “The ‘ghost’ of peak external debt payments in September and December is the most often-cited enemy of the ruble. The attempt to test 44.40 looks well grounded.”
The central bank widened the ruble’s trading band in August as it prepares for the shift to a freely floating ruble that would favor using interest rates rather than tapping reserves to control currency movements and manage inflation. It has no daily limit for the size of its interventions and shifts the boundary by 5 kopeks every time it sells $350 million, according to the Bank of Russia’s guidelines.
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