Russia's Ruble Is Headed for Second Weekly Drop Against Euro

By Emma O'Brien

June 27 (Bloomberg) -- Russia's ruble headed for its second weekly decline against the euro and rose versus the dollar, leaving the currency little changed for a second straight week against the central bank's dollar-euro basket.

The ruble was at 36.9120 per euro by 10:35 a.m. in Moscow, from 36.9507 late yesterday, taking its decline against the common currency this week to 0.4 percent. It traded at 23.4590 per dollar, from 23.4358, leaving it 0.5 percent stronger versus the U.S. currency on the week. That left it little changed at 29.5149 against the basket.

Bank Rossii buys and sells rubles daily to keep it within a trading band against the basket, limiting gains that can hurt the competitiveness of Russian exports. The central bank may expand the band by as much as 5 percent on each side and intervene at varied levels to boost volatility and deter speculators, Deputy Chairman Konstantin Korishchenko said in an interview June 25.

Banks including Merrill Lynch & Co. have predicted the ruble will be allowed to strengthen by as much as 4 percent this year after inflation accelerated to 15.1 percent in May. While a strengthening ruble reduces prices on imported goods it also encourages inflows into Russia which may stoke inflation, Korishchenko said.

The currency basket is calculated by multiplying the ruble's rate against the dollar by 0.55 and versus the euro by 0.45, then adding the two numbers together. It was at 29.5177 to the basket on June 20, and 29.5175 yesterday.

To contact the reporter on this story: Emma O'Brien in Moscow at eobrien6@bloomberg.net