Dollar Climbs From 4-Week Low Before Fed; Ruble Snaps 7-Day Drop

he dollar advanced from the weakest level in four weeks against the yen amid speculation Federal Reserve policy makers will remove their pledge to keep borrowing costs low for a considerable period in their statement today.

Russia’s ruble snapped a seven-day drop as the finance ministry said it was selling reserves to counter a plunge that sent the currency to the least on record yesterday. Norway’s krone weakened against all of its 16 major peers as oil traded near a five-year low. New Zealand’s dollar fell the most in more than a week after a report showed the current-account deficit widened.

“Pretty much everyone expects the ‘considerable time’ phrase to go,” said Adam Cole, head of global currency strategy at Royal Bank of Canada in London. “Our bias would be that we go into the meeting with the market still with a large overhang of long dollar positions and, if anything, the risk is therefore disappointment.” A long position is a bet an asset’s price will rise.

The dollar gained 0.6 percent to 117.14 yen at 7:02 a.m. New York time after depreciating to 115.57 yesterday, the weakest since Nov. 17. The U.S. currency strengthened 0.4 percent to $1.2456 per euro. The yen fell 0.2 percent to 145.89 per euro after gaining 1.6 percent in the previous two days.

Dollar Advance

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 trading partners, gained 0.4 percent to 1,114.74. It closed at 1,122.34 on Dec. 5, the highest level since March 2009.

JPMorgan Chase & Co.’s Global FX Volatility Index reached 10.06 percent, the highest level since September 2013. It has climbed from a record-low 5.28 percent set on July 4.

“The Fed is likely to get rid of the ‘considerable time’ phrase today,” said Shinji Kureda, head of foreign-exchange trading at Sumitomo Mitsui Banking Corp. in Tokyo. “But that could boost speculation of a rate hike in mid-2015, weighing on U.S. stocks and dollar-yen. There is no end in sight yet to declines in oil and commodity currencies.”

The ruble lost 4.7 percent yesterday after weakening more than 19 percent in the biggest one-day slump in 16 years after Russia’s central bank unexpectedly raised its key interest rate to 17 percent from 10.5 percent.

Ruble Panic

“It’s a panic,” Greg Anderson, Bank of Montreal’s global head of foreign-exchange strategy in New York, said by phone. While the currencies of other oil-producing nations have fallen, “it’s just the magnitude in rubles that’s stunning,” reflecting the illiquidity of the market, he said.

The ruble rose 2.3 percent today to 65.92 per dollar after depreciating to a record 80.10 yesterday.

“I certainly heard a level of 100 being spoken about yesterday,” Phyllis Papadavid, a senior foreign-exchange strategist at BNP Paribas SA in London, said in an interview on Bloomberg Television’s “Countdown” with Mark Barton and Anna Edwards. “If we see the currency weakening and we see oil prices continue at these levels, it will feed through to further instability in the ruble unfortunately.”

Crude oil futures fell as much as 2.4 percent after sliding below $54 a barrel yesterday for the first time since May 2009. The United Arab Emirates said the Organization of Petroleum Exporting Countries won’t cut production even if prices fall as low as $40 a barrel.

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