Ruble falls as oil prices continue slide

Posted On: January 12, 2015

The ruble fell 1.9 percent Monday to 62.7350 per U.S. dollar, Bloomberg reported. Meanwhile, Fitch Ratings devalued Russia's credit score to one step above junk as crude oil prices dropped below $50 per barrel.

Prices of crude oil declined 2.6 percent Monday to $48.81 after falling 11 percent last week. The yield on five-year ruble bonds increased 84 basis points to 16.26 percent, marking its highest rate since Dec. 17. Five-year credit default swaps rose 6.5 basis points to 585.

"Oil remains the key factor pressuring the Russian financial markets," Slava Smolyaninov, the chief strategist at UralSib Financial Corp. in Moscow, told Bloomberg. "The Fitch downgrade brings Russia closer to the verge of the non-investment grade status, clearly. The bond market has already priced in Russia far below the current ratings."

Standard & Poor's noted in December that it expects to finish a review of Russia by the middle of January and establish a negative outlook, according to Reuters. This drawback increases the odds that Russia will lose investment-grade status.

The news source added that Russian stock indexes were mixed to begin the week. In recent ratings, a weaker ruble has bolstered the MICEX Index but devalued the RTS Index. On Monday, the MICEX Index increased 1 percent to 1,531 points and the RTS Index decreased 1.9 percent to 768 points.

Category: Industry News


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