By Vladimir Kuznetsov
The ruble and Russian stocks headed for their biggest weekly losses since February as a persistent global glut in oil undercut support for assets in the world’s biggest energy exporter and markets awaited publication of a jobs report that may help shape the U.S. interest-rate outlook.
The currency weakened 0.4 percent to 66.131 per dollar as of 1:15 p.m. in Moscow, set for a 2.4 percent decline this week.
The MICEX Index of major Russian stocks fell 0.7 percent, extending its five-day drop to 3 percent, as a gauge of oil and gas shares slid the most since January. Markets are closed on Monday for a holiday. Brent crude, which has rebounded more than 60 percent since reaching a more than 10-year low in January, is heading for its first weekly retreat in more than a month. Data showed U.S. stockpiles rose to the highest since 1929 and production increased in April from OPEC members. Crude and natural gas account for as much as 60 percent of Russia’s export earnings.
“The ruble is tracking oil rather tightly, but not in lockstep,” said Yury Tulinov, head of research at Societe Generale SA’s Russian unit Rosbank PJSC. “It underperformed oil on the way up as people were wary of the risk of the central bank resuming interventions to refill reserves. Now you can hardly expect it to outpace oil if it starts correcting.”
Crude fell 0.3 percent to $44.87 per barrel in London, heading for a 6.8 percent decline this week. American jobs data on Friday will be closely scrutinized to see if they support comments from Federal Reserve presidents this week that economic conditions may warrant a rate increase in June, Sberbank said.
“I think for the ruble, non-farm payrolls are the second- biggest market mover in the calendar month after U.S. oil inventories,” said Tom Levinson senior foreign-currency and rates analyst at Sberbank CIB. “I would say the best outcome for the ruble would be one that shows underwhelming jobs growth that keeps June Fed hike chances low, but decent enough not to lead to a big rise in concern over growth in the U.S. during the second quarter.”
Bonds retreated, pushing the yield on 10-year government debt up 1 basis point to 9 percent, up 10 basis points this week. The MICEX Index has fallen 3.4 percent since April 28, when it closed within a fraction of a record high.