Russia's Ruble Drops

Russia's ruble weakened against its dollar-euro basket as the country's stock market fell after Prime Minister Vladimir Putin's said Russia may pull out of its bid to join the World Trade Organization.

The currency slid to the lowest level in more than two weeks versus the basket as Russia's benchmark Micex Index dropped to a 23-month low. The world's largest energy exporter has had ``no benefit'' from talks to join the WTO, Putin said yesterday, further worsening Russia's relations with the West since the country's five-day war with neighboring Georgia.

The currency weakened 0.4 percent to 29.7725 against the basket by 1:51 p.m. in Moscow, from 29.6694 yesterday. The basket is calculated by multiplying the rate to the dollar by 0.55, the euro rate by 0.45 and then adding the two together. Russia's central bank keeps the ruble in a trading corridor against the basket to limit the currency's gains and their effect on the competitiveness of local exports.

The ruble slipped to a seven-month low of 24.6877 against the dollar, before trading at 24.6818, from 24.4393 yesterday. It strengthened to 36.0062 per euro, from 36.0616.

Russia's currency has lost 4.1 percent against the dollar and about 1.4 percent to the basket since Aug. 7, when Georgia is alleged to have attacked Russian peacekeepers and citizens in the separatist region of South Ossetia, causing Russia to send in troops. President Dmitry Medvedev halted the offensive Aug. 12.

Russia's parliament voted yesterday to support independence for South Ossetia and another Georgian breakaway region, Abkhazia. Russia is also reviewing its relationship with the North Atlantic Treaty Organization after the military alliance downgraded its ties with the nation last week.

Russia, Bloomberg
8/26/2008 9:01:26 AM