MOSCOW: The rouble defied falling oil prices to firm on Friday, buoyed by what traders said were sizeable interventions by the central bank after President Vladimir Putin gave instructions to deal with "speculators" he blames for weakening the currency.
Russian stocks fell heavily, however, weighed down by oil prices falling further below $70 per barrel. The dollar-based RTS stock index fell below 900 for the first time since July 2009, briefly hitting a five-year low of 893 points, only to rebound as the rouble suddenly strengthened.
At 1515 GMT, the rouble was up 1.7 percent at 53.39 against the dollar and 2.7 percent stronger at 65.68 against the euro.
The RTS fell 1.3 percent to 907 points.
The rouble-based MICEX stock index was down 2.9 percent to 1,537 points.
The rouble was in positive territory for most of the day but volatile, its periodic surges signalling interventions.
"It's undoubtedly the central bank - more than a billion dollars was sold in a few minutes. No one else is in a position to trade such volumes now," said a dealer at a big Russian bank.
Investors were unnerved on Thursday by Putin's harsh anti-Western rhetoric over Ukraine and sceptical about promised pro-business reforms he outlined in a speech.
"The proposals are perceived now as inadequate steps for returning the trust of the business community after the kind of decisions that were taken this year," VTB24 analyst Stanislav Kleshev said, referring especially to the state's confiscation of oil firm Bashneft from leading conglomerate Sistema.
Sistema shares were down 12 percent on Friday following a 13 percent slide on Thursday. SPECULATORS
In his speech, Putin told the central bank and the finance ministry to cooperate in tackling speculators on the currency market - a mixed blessing for the rouble, given jitters about possible capital controls. With its interventions "the central bank is obeying the instructions of (Putin) who apparently does not want the dollar firmer than 54 (roubles)," said a dealer at a big Western bank.
"But at root this won't change the situation: oil is cheap, sanctions are in place, the population keeps on stocking imported goods despite the rouble's rate and the revenues from those sales are immediately converted into foreign currency."
The central bank said it had conducted $1.9 billion worth of interventions on Dec. 2, raising the total this week, before Friday, to $2.6 billion. It releases its interventions data with a two-day lag.
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