Ruble continues decline as oil falls toward $50 per barrel

Posted On: January 06, 2015

The ruble declined 3.3 percent Tuesday to 62.9080 per U.S. dollar, Bloomberg reported. Five-year credit default swaps increased 63 basis points to 601, marking its highest rate on a closing basis since March 2009.

The price of Brent crude oil fell toward $50 per barrel for the first time in nearly six years, the publication noted. On Friday, Fitch Ratings will announce the results of its credit-rating review for Russia. In December, Standard & Poor's said that it would likely lower the country's non-investment rating within 90 days.

"There's concern with regards to Russia's ability to maintain its budget commitments and over Russia being downgraded to junk," Dmitri Petrov, an analyst with Nomura Holdings Inc. in London, told Bloomberg. "Oil is trading substantially below even the worst expectations of the government. Every move from here onward will be increasingly painful for the currency."

Forbes reported that Russian companies have recently scrambled to exchange foreign currencies so they can relieve short-term debts to Western lenders. Because of Russia's involvement in Crimea, sanctions have prevented the country from luring long-term financing through U.S. and European Union banks.

EPFR Global, a financial analysis firm in Cambridge, Massachusetts, noted that investors and hedge funds have been plenty busy trading Russian equities in the past week.

Category: Industry News

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