MOSCOW: The rouble and Russian share indexes declined further on Tuesday as global oil prices fell to new five-year lows, with mounting expectations the Russian central bank will raise interest rates on Thursday.
At 0800 GMT, the rouble was 0.9 percent weaker against the dollar at 54.25 roubles per dollar and lost 1.1 percent to 67.00 versus the euro.
Global oil benchmark Brent was down 0.7 percent to $65.75, extending Monday's steep decline.
The Russian central bank said on Tuesday it had spent $1.93 billion in currency market interventions on Friday, bringing last week's interventions to $4.53 billion despite the bank's decision to float the rouble a month ago.
"The CBR simply is not doing enough to convince the market that it is serious, using a pea-shooter in terms of current piecemeal intervention," said Standard Bank analyst Tim Ash in a note.
"It will need to hike rates significantly to defend the rouble, or let the rouble further weaken." The central bank board is meeting on Thursday to consider interest rate policy, with rising expectations that it will raise its main lending rate again following a 1.5 point rise in October.
"The market is awaiting the CBR's rate decision on Thursday with bated breath, with estimates of a possible hike ranging from 50-400bp (baby steps could lead to further rouble weakness)," Alfa Bank analysts said in a note. Russian stock indexes also fell heavily in response to the plunging oil price.
The dollar-based RTS fell 1.9 percent to 854 points, having earlier set a new five-year low of 847 points. The rouble-based MICEX index was down 0.7 percent at 1,471 points. "If earlier investors looked for defence of their savings from devaluation by buying shares, now we're seeing the effect of a capital outflow from securities," Veles Capital analyst Alexander Kosyukov said in a note.
"Such a 'flight' shows the extremely negative mood of investors, as a result of which we could see the RTS index falling to 800 points in the next week or two."
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