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Russia fell short of its bond auction target for a third week as contagion from China’s yuan devaluation spread through emerging markets. The ruble fell as Brent slid below $48 a barrel for the first time since January.

The government sold 60 percent of the 10 billion rubles ($151 million) of floating-rate and fixed-coupon bonds it offered in auctions Wednesday after investors sought a higher price for the debt than the Finance Ministry was prepared to pay. The ruble dropped for a fifth day, retreating 0.5 percent to 66.1980 against the dollar, the lowest since Feb. 12.

A glut in oil and a slowing Chinese economy are pounding Russian bonds and the ruble along with most emerging-market assets. While the ruble’s drop limits the Bank of Russia’s ability to counter an economic contraction with further rate cuts, the weaker currency protects budget revenue by boosting government proceeds from dollar-denominated energy exports.

“The authorities will only take measures” to slow the declines “if there are signs of panic,” Dmitry Polevoy, the chief Russia economist at ING Bank Eurasia JSC in Moscow, said by e-mail.

The reverberations from China’s decision to let the yuan weaken and the slide in the ruble forced Russia’s ex-Soviet neighbor Kazakhstan to devalue the tenge by the most since February 2014 on Wednesday. Pressure on developing nation currencies is also mounting as the U.S. moves toward its first interest-rate increase in almost a decade.

Rate Increases

Derivatives traders have switched to positioning for interest-rate increases in the next three months after Russia cut benchmark borrowing costs 600 basis points this year. The ruble would need to weaken to about 70 a dollar before the central bank brings back auctions of one-year dollar cash to help companies pay foreign currency debts, Sberbank CIB said Aug. 12.

“If there’s panic among the population, it’s bad for financial stability and the central bank may even raise rates,” Daria Isakova, an economist at Otkritie Capital in Moscow, said by e-mail. “It’s hard to say when that might happen.”

The government sold 985 million rubles of floating-rate notes due January 2020 out of 5 billion rubles offered. In a later auction it placed all 5 billion rubles of fixed-coupon bonds due May 2019.

Five-year ruble notes fell for a fourth day, lifting the yield one basis point to 11.29 percent, the highest in more than a month. Forward-rate agreements show traders betting on a 28 basis-point increase in borrowing costs in the next three months.