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By Bloomberg

Russia’s ruble led a selloff in emerging markets, dropping to a seven-month low as ING Groep NV said the currency is under threat as oil heads toward $40 a barrel.

The ruble breached 70 per dollar after declining to 2.5 percent to 70.847 at 10:36 a.m. in Moscow, the eighth day of declines and the lowest since January. Local-currency government bonds fell for the seventh day, lifting the five-year yield 39 basis points to an almost five-month high of 12.34 percent. The RTS Index tumbled to the lowest level since February.

Russia has been among the most vulnerable to the selloff that has gripped emerging markets from Asia to Latin America since China devalued its currency two weeks ago. The world’s largest energy exporter gets about 50 percent of its revenue from oil and gas and counts China as its biggest trading partner. Brent crude, the benchmark used to price Russia’s main export blend, dropped 2.9 percent to $44.13 per barrel.

“The markets are panicking, in such conditions almost any ruble level is possible,” Yury Tulinov, head of research at Rosbank PJSC in Moscow, said in e-mailed comments. “The global selloff will continue as long as there are concerns about China and oil extends declines.”

If oil continues its drop toward $40 the ruble may weaken as low as 75 per dollar, said Dmitry Polevoy, the chief Russia economist at ING Bank Eurasia JSC.

Demand from exporters for rubles to meet tax deadlines this week did little to cushion the selloff Monday. Russian Prime Minister Dmitry Medvedev said on Saturday that the nation’s largest exporters will start selling foreign currencies to support the ruble in the near future, projecting a recovery for the currency.

The Micex Index of stocks fell 1.1 percent to 1,644.45, led by OAO Sberbank and OAO Gazprom, which lost 2.4 percent and 1.5 percent respectively.

“As soon as oil will find a bottom, the ruble will do the same and might even recover considerably,” Vladimir Osakovskiy, chief economist for Russia at Bank of America Corp. in Moscow, said by e-mail. “The bottom is yet to be found.”