Azernews.Az

By Bloomberg

The ruble fell for the third time in four days and Russian dollar bonds declined before Fitch Ratings reveals later today whether it’s downgrading the sovereign’s rating.

The currency lost 1.8 percent to 61.40 per dollar at 3:36 p.m. in Moscow, taking this week’s drop to 3.6 percent. The yield on Russian Eurobonds due April 2042 rose eight basis points to 7.18 percent.

Russia’s investment-grade status is under threat after the price of oil, the nation’s main export earner, more than halved in value since June and sanctions over the conflict in Ukraine tipped the economy toward a recession. Fitch currently rates Russia two steps above junk with a negative outlook.

“Russian markets haven’t really opened yet, because locals are still” on New Year and Orthodox Christmas holidays, Hertta Alava, the head of emerging markets at FIM Asset Management Ltd. in Helsinki, said by e-mail. A downgrade “shouldn’t come as a shock” as “there was so much outflow from Russian assets last year and everybody is aware of all the issues,” she said.

Worst Performance

The Russian currency is down 1.1 percent against the dollar this year after tumbling 41 percent in 2014, its worst performance since 1998, when Russia defaulted on local debt.

While Societe Generale SA said Fitch will probably cut by one step today, Standard & Poor’s signaled last month it may drop the country below investment grade within 90 days. The nation’s low levels of public debt and foreign-currency war chest probably won’t prevent a downgrade, analysts say.

The dollar-denominated RTS Index of equities slumped 5.3 percent today after surging 8.8 percent yesterday from a three- week low. The benchmark Micex index dropped 3.1 percent.

Five-year credit default swaps, which reached a five-year high on Jan. 6, rose 25 basis points to 566.5. Brent crude slid 0.9 percent to an almost six-year low of $50.50 a barrel.