Ruble Hurt as Foreigners Ditch Weak Stocks

The ruble staged its biggest percentage fall versus the euro-dollar basket since mid-May on Wednesday, as a sharp sell-off on the Moscow bourse prompted foreign investors to repatriate their cash.

The ruble weakened to nearly 29.41 versus the basket of 55 cents and 45 euro cents, retreating from the 29.26 level set Monday -- which was its strongest since the current composition of the basket was set in February 2007.

The move came as the country's benchmark RTS Index plunged below the psychological 1,800 points level to a 14-month low.

"There was a sharp crunch in the equity market, and that led to an outflow of funds and the purchase of hard currency," said Sergei Romanchuk, dealer at Metallinvestbank.

The RTS Index has lost more than 12 percent since Prime Minister Vladimir Putin began to criticize coal and steel company Mechel two weeks ago. He has accused the company of tax evasion.

Profit taking after Monday's gains was also a factor, said Shahin Vallee, currency strategist at BNP Paribas in London.

"It's very typical. ... Instead of accumulating long [ruble] positions, people tend to pocket the gains made on the revaluation and reduce their positions after that," he said.