Azernews.Az

By Bloomberg

Russian currency-market interventions that have topped $13 billion are failing to stem the ruble's slide to unprecedented lows as oil tumbles and investors shun riskier assets.

The Bank of Russia raised its dollar-euro basket band by 30 kopeks to 46.25 yesterday as falling crude and concern global growth will slow weakened the ruble 1 percent. The central bank has spent about $13 billion to shore up the currency based on the trading-band shift and interventions of $1.77 billion on Oct. 15, according to data on its website today.

Brent crude has tumbled 25 percent from a June peak, worsening the outlook for Russia, which derives more than half of its budget revenue from energy and is teetering on the brink of recession as sanctions over the Ukraine crisis spur a domestic dollar shortage. Policy makers have stepped up efforts to buttress the ruble, with the central bank announcing yesterday that it will offer as much as $3.5 billion of foreign currency repurchase agreements at debut auctions next week.

"The size of the announced offering was lower than what's needed," Aram Kazaryan, a foreign exchange trader at MDM Bank in Moscow, said by e-mail. "It's still easier for banks to buy the dollar on the spot market rather than borrow from the central bank."

The currency depreciated 0.6 percent to 41.11 per dollar at 11:32 a.m. in Moscow. It weakened 0.6 percent to 46.2649 against the basket. Brent crude for December settlement was little changed near a four-year low at $85.92 per barrel in London.

Free-Float Plan

The world's biggest energy exporter is eating into its $451.7 billion reserves to slow a depreciation that's made the ruble the world's worst performer in the past three months. The repo program, which has a $50 billion ceiling and runs through 2016, comes as the Finance Ministry plans to provide $3 billion of liquidity in the form of foreign-currency deposit auctions.

The monetary authority, which has said it plans to adopt a free float by next year, currently allows the currency to trade within a 9-ruble-wide corridor. When the ruble weakens past the boundary, the bank spends $350 million to defend it before shifting the band by 5 kopeks, according to its guidelines. It repeats the process each time the currency falls by 5 kopeks.

The monetary authority reports the currency sales with a two-day lag.