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By Bloomberg

The ruble slid, trimming a weekly rally that drove the currency up the most since in 16 years as the government ordered Russian exporters to reduce their foreign- currency holdings to shore up confidence.

The ruble lost 2.5 percent to 53.9055 a dollar by 2:38 p.m. in Moscow, ending a five-day rally. The currency advanced 8.6 percent in its first weekly increase since the period ended Nov. 23, taking it out of step with oil prices that are trading near five-year lows in London and poised for their fifth weekly retreat. Brent crude climbed 0.5 percent to $60.52 a dollar today. Government bonds rose for the first time in four days.

“As long as oil remains at these levels, the devaluation risk will persist,” Vadim Bit-Avragim, a money manager at Kapital Asset Management LLC in Moscow, said by e-mail. “The holiday of the rising ruble will end at the start of next year since there are no fundamental reasons for its strengthening.”

Today’s decline underscores the fragility of coordinated measures by Russia’s government and central bank that drove the ruble’s 49 percent rebound from a record-low 80.10 on Dec. 16. Gazprom and four other state-controlled exporters were ordered this week to cut foreign-currency holdings by March 1 to levels no higher than they were on Oct. 1, while the central bank sought to make it easier for banks to access dollars and euros.

The currency has fallen 39 percent this year, the most among 24 developing countries monitored by Bloomberg. That puts it on course for the worst year since 1998, when Russia defaulted on local debt. Brent, the oil grade traders use to price Russia’s main export blend, has declined 45 percent in 2015. The government gets about 50 percent of budget revenue from oil and gas taxes.

Exporter Sales

“Exporters have to sell, and while volumes aren’t that large, it’s enough to move this thin market,” Iskander Abdullaev, analyst at Sberbank CIB, said in e-mailed comments. “The market’s firmness will be tested later today when U.S. opens. I think there was an instruction to calm down the rate until the end of the year, so that retail clients don’t panic before holidays.”

Average trading volume in the ruble for the first four days of the week was almost 30 percent below the 12-month average, according to data compiled by Bloomberg. Russian markets will close for an annual New Year’s holiday from Dec. 31 through Jan. 4 and for a Christmas holiday on Jan. 7.

Downside Risks

Highlighting the risks facing Russia as it contends with sanctions over the conflict in Ukraine and slumping oil, Standard & Poor’s said Dec. 23 there’s at least a 50 percent chance it will cut the sovereign’s credit rating to below investment grade within 90 days. The economy of the world’s largest energy exporter is set to shrink 1.2 percent next year, the median of 46 analyst estimates compiled by Bloomberg show.

The Micex Index of equities rose for a third day led by OAO Lukoil. The yield on five-year government bonds declined eight basis points to 15.34 percent, paring its increase since a surprise interest-rate decision on Dec. 16 to 102 basis points.

The Bank of Russia raised borrowing costs to 17 percent from 10.5 percent earlier that day, triggering panic that sent the ruble plunging as much as 20 percent against the dollar.

It recovered as central bank limits on ruble liquidity prompted a cash squeeze that boosted demand for the local currency, while policy makers introduced measures to curb banks’ needs for dollars. Along with forced revenue sales by exporters, Russia’s parliament approved a 1 trillion-ruble ($19 billion) bank recapitalization plan to try to prevent the currency crisis from spilling over into the financial system.

“We’re back to fundamentals,” Sergey Fishgoyt, the deputy head of foreign-exchange trading at Otkritie Bank in Moscow, said by e-mail. “The fundamental range for the ruble is now 58 to 68” to the dollar, he said.