Azernews.Az

By Bloomberg

The ruble picked up right where it left off last year, weakening as oil prices extend their plummet.

Russia’s currency declined 4.1 percent to 58.40 per dollar at 1:05 p.m. in Moscow, in its first day of trading of 2015 after a 46 percent decline last year. Government bonds fell with the five-year yield climbing eight basis points to 15.55 percent. The Micex Index of stocks rose 0.7 percent to 1,406.56.

The currency of the world’s largest exporter of energy is under pressure from the falling price of crude, which declined to $55.51 per barrel in London, the lowest level since May 2009. The ruble was hammered last year as the impact of falling oil was exacerbated by stalling economic growth triggered by US and European Union sanctions over the Ukraine conflict.

“The ruble enters 2015 with a huge challenge as nothing supportive for the currency is yet visible,” Vladimir Miklashevsky, a strategist at Danske Bank A/S in Helsinki, said by e-mail today. Falling commodities prices and investors shifting from emerging markets to the U.S. dollar make “prospects for ruble assets rather gloomy,” he said.

Trading volume in the dollar-ruble spot market on the Moscow Exchange is small due to continuing national holidays with only $225 million traded compared with a $4.8 billion daily average in the last 12 months.

The Russian economy may shrink as much as 4.7 percent this year if oil averages $60 a barrel under a “stress scenario,” the central bank said in December. Net capital outflows may have reached $134 billion in 2014, central bank data show.

Overnight ruble deposit rates dropped to 16.75 percent from 17.3754 on Dec. 30, dipping below the central bank’s main interest rate for the first time since a surprise 6.5 percentage point increase on Dec. 16 left the benchmark at 17 percent.