MOSCOW: The Russian rouble bounced off multi-month lows on Thursday as oil prices stabilised, offering a buying opportunity given that analysts see Russian fundamentals on track to improve.
Battered by a sell-off in oil prices, the rouble hit its weakest level since Feb. 1 at 60.43 on Wednesday but gained 0.6 percent to 59.99 to the greenback as of 0927 GMT.
The move came as prices for Brent crude oil, a global benchmark for Russia's key export, inched 0.2 percent higher to $44.9 per barrel.
"The Russian FX market remains mostly focused on the performance of crude oil," VTB Capital analysts said in a note.
Russian authorities, who for months said the free-floating rouble was overvalued, welcomed the depreciation of the currency, which is still more than 2 percent stronger against the dollar than at the end of 2016.
The rouble rate of 58-62 against the dollar would be "comfortable" for most of industries to support profitability of their exports operations and carry on with substitution of imported goods and services, the press office for the Russian Industry and Trade ministry cited Minister Denis Manturov as saying.
Some market players, mostly foreign investors, already considered a combination of Russian treasury bond yields and the rouble rate of 60 per dollar as an attractive entry point, Rosbank, a Russian subsidiary of Societe Generale, said in a note to clients.
After cutting rates three times this year, the central bank's key rate of 9 percent still offers opportunities for carry trade, when investors borrow dollars cheaply and buy into higher-yielding instruments in other currencies.
Expectations that the Russian economy will grow this year after two years of recession also play in the rouble's hands.
Indeed, market players are pricing in risks related to oil prices and politics, Rosbank said.
The rouble has been hurt by mounting political risks, such as US lawmakers calling for more sanctions against Russia, which has promised retaliatory measures.
Versus the euro, the rouble gained 0.7 percent to trade at 66.92.
Russian stock indexes fell on Thursday, pricing in lower oil prices. The dollar-denominated RTS index dropped 0.3 percent to 970.1 points, while the rouble-based MICEX slid 0.2 percent to 1,847 points.
The MICEX may fall below 1,840 points during the day, which will largely depend on the rouble performance, Promsvyazbank said in a note.
The rouble-traded MICEX comes under pressure when the rouble firms, while its dollar-traded peer RTS benefits from the stronger rouble.
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