Ruble Set for Record Monthly Drop as Stock Trading Is Halted

By Emma O'Brien

Sept. 30 (Bloomberg) -- The ruble fell against the dollar and was headed for its biggest monthly drop on record versus the country's currency basket, as stock trading was halted after U.S. lawmakers rejected a $700 billion bank-bailout package.

The currency dropped as Russia's benchmark Micex stock index slid 1 percent before trading was stopped for two hours and oil, Russia's largest export earner, extended yesterday's 9.8 percent decline. The ruble, which the central bank manages against a dollar-euro basket, was also poised for its biggest quarterly drop versus the dollar since the final three months of 1999, when it weakened 9.2 percent.

``Investors everywhere are suffering an almost complete loss of confidence,'' Chris Weafer, chief strategist in Moscow at UralSib Financial Corp., said in an e-mailed note to clients today. Sentiment has been ``executed,'' he said.

The currency was at 25.3811 per dollar by 10:44 a.m. in Moscow, from 25.3059 yesterday, headed for a 3 percent decline in the month. It rose to 36.4723 per euro, from 36.5256, poised to lose 0.8 percent in September. The ruble was little changed at 30.3644 to the basket, from 30.3548 late yesterday, when it dropped 0.4 percent.

Bank Rossii, Russia's central bank, keeps the ruble within a trading range against the basket to minimize the impact of its fluctuations on the competitiveness of Russian exports. The basket rate is calculated by multiplying the ruble's rate to the dollar by 0.55, the euro rate by 0.45, then adding them together.

Quarterly Decline

The ruble has lost 8.2 percent versus the dollar this quarter and 2.9 percent against the basket, its first quarterly drop this year, as investor shunned higher-yielding, emerging- market assets amid the global financial turmoil. It's down 1.8 percent versus the basket in September, the most since the currency gauge was introduced in February 2005.

The Micex may resume trading at 12:30 p.m. in Moscow, spokesman Alexei Gerasyuk said. In anticipation of a slump in stocks, Russia's market regulator banned all unsecured short sales today for the second time this month. A short position is a bet an asset will fall.

Bank Rossii sold as much as $13 billion in September to prevent the ruble from falling beyond 30.40, the lower end of the basket's trading range, Evgeniy Nadorshin, a senior economist at Moscow-based Trust Investment Bank, said yesterday.

Oil fell 2.4 percent to $94.08 a barrel in after-hours electronic trading on the New York Mercantile Exchange today.

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