Azernews.Az

By Bloomberg

Even after falling to a record-low closing price on two consecutive days in the past week, the ruble is still expensive when measured against the price of crude and will drop further, Danske Bank A/S says.

A weaker currency helps the government meet its fundraising obligations by boosting budget revenue from exports in local- currency terms. The price of a barrel of Brent in rubles sank 1.4 percent to 2,984 yesterday, the lowest since April 14 and 50 rubles above the weakest price in 4 and a half years. While it rose to 3,005 rubles by 11:57 a.m. in Moscow on Wednesday as the ruble resumed its drop, it’s still 452 rubles below the average for the past 12 months.

"The downward trend in oil prices doesn’t seem to change," Vladimir Miklashevsky, a strategist at Danske Bank, said by e- mail. "The ruble looks expensive relative to oil, so the downside risks prevail."

Miklashevksy lowered his three- and six-month ruble forecasts by about 8 percent this week to 70 and 72 rubles per dollar, respectively.

The ruble weakened 1.3 percent against the dollar to 69.7180 on Wednesday, the second-worst drop in emerging markets today and an 11 percent slump in the month. Brent crude traded little changed at $43.18 a barrel after falling 17 percent this month as concern China’s economy is flagging roiled commodity markets.

Russian Finance Minister Anton Siluanov could do with the support from a weaker currency. On Tuesday his ministry said it wouldn’t hold its weekly bond auction because of “unfavorable” market conditions -- the first cancellation since January.