Ruble Falls to Lowest in Year Against Dollar, Drops Versus Euro

By Emma O'Brien

Sept. 4 (Bloomberg) -- Russia's ruble traded near its weakest level in almost a year against the dollar and was at a 3 1/2-week low versus the euro.

The managed currency yesterday fell 1.3 percent versus the dollar-euro basket, its biggest one-day decline since 2005, when the mechanism used by policy makers to control the ruble's fluctuations was introduced. The ruble has lost 7.5 percent against the dollar since the start of August as oil, the nation's biggest export earner, slumped 12 percent and investors withdrew money from Russia following the war with neighboring Georgia.

The ruble slipped as much as 0.4 percent versus the U.S. currency today, and was at 25.2199 per dollar by 10:53 a.m. in Moscow, from 25.1257 yesterday. It extended yesterday's 1.2 percent drop versus the euro, weakening to as low as 36.6379, from 36.4287.

Against the basket, the ruble declined 0.4 percent to 30.3201. The basket rate is calculated by multiplying the dollar rate by 0.55, the euro rate by 0.45, and then adding them together.

About $30 billion was extracted from Russia because of the geopolitical tension during August, according to BNP Paribas SA. That capital outflow continued yesterday, said Jon Harrison, an emerging-markets currency strategist in London at Dresdner Kleinwort.

``The depreciation pressure is being caused by capital outflows, for example due to equity sales,'' he said.

Stocks Fall

Russia's benchmark Micex index of stocks has lost 7.5 percent since Aug. 7, when Georgia is alleged to have attacked Russian troops and citizens in the breakaway region of South Ossetia. The dollar-denominated RTS index fell 4.3 percent yesterday, closing at its lowest level in a week.

U.S. Vice President Dick Cheney will be in Georgia today, where he will address the media with President Mikheil Saakashvili. The U.S. yesterday announced a $1 billion aid package to shore up Georgia's economy and help displaced citizens. Cheney said yesterday the U.S. is seeking ``greater stability'' in the Caucasus region.

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