Azernews.Az

By Bloomberg

The ruble weakened past 60 against the dollar for the first time since March, tracking the price of oil and raising the likelihood that Russia’s central bank will hold off on cutting interest rates this week.

The currency fell 1.1 percent to 60.32 per dollar by 10:23 a.m. in Moscow. Government bonds known as OFZs fell for a seventh day, with the yield on five-year securities climbing nine basis points to 11.17 percent.

The ruble is less than 1 percent away from erasing this year’s gains after posting five straight weekly drops, potentially spurring the cost of imports and jeopardizing the Bank of Russia’s efforts to curb inflation. This presents a “difficult choice” to policy makers before they meet to decide on interest rates on July 31, according to Capital Economics. The central bank has lowered rates four times this year to support the slowing economy.

“On the one hand, the recession in the economy and extremely tight credit conditions argue for a rate cut,” Liza Ermolenko, an analyst at Capital Economics in London, said in e- mailed comments. “But on the other hand, easing policy at the time when the ruble is weakening sharply could cause it to fall even further, creating risks for inflation and financial stability.”