Russia Interventions Top $4 Billion as Crude Drop Worsens Rout

By Vladimir Kuznetsov Photographer: Andrey Rudakov/Bloomberg

Elvira Nabiullina, chairman of Russia's central bank, has raised the key interest rate... Read More

Russia’s currency interventions exceeded $4 billion last week as oil’s drop exacerbated the ruble’s longest rout in seven months.
The central bank spent $866 million of foreign currency on Oct. 9, according to data on its website today. Oil, which along with natural gas contributes almost half of Russia’s revenue, lost 4.4 percent in the U.S. last week, the largest weekly slide since January.
The ruble has fallen for five weeks against the dollar, the longest stretch of losses since Russia’s annexation of Ukraine’s Crimea peninsula in
March. Wagers for interest-rate increases soared to a six-year high on Oct. 10 on speculation the central bank will raise borrowing costs to shore up the currency amid a domestic dollar and euro shortage triggered by sanctions over Ukraine.
The bank, which releases the amount of its intervention with a two-day lag, said it moved the upper band of its target dollar-euro basket by 25 kopeks to 45.25 on Oct. 10. It probably sold about $2 billion in the currency market that day as the ruble weakened further past 40 per dollar, according to estimates by Alfa Bank.
The exchange rate weakened 0.2 percent versus the basket to 45.1622 by 10:34 a.m. in Moscow. It was little changed at 40.3140 per dollar. Trading in forward-rate agreements increased more than 100 basis points last week to 168 points, the biggest bets for interest-rate increases since October 2008.
Central bank Governor Elvira Nabiullina has raised the key interest rate by 250 basis points since March to support Russian assets as the conflict in Ukraine curbed investor appetite for the ruble, stocks and bonds. Policy makers refrained from raising rates last month as they juggled above-target inflation with an economy teetering near a recession.
Multiple rounds of U.S. and European Union sanctions on companies and individuals blocked their access to western debt markets as they contended with the almost $55 billion of debt the central bank estimates is maturing through December.