TOKYO: The Russian rouble rebounded from record lows on Tuesday after the Russian central bank hiked interest rates to halt a collapse in its currency, while the backdrop of falling oil prices and concerns over global growth supported the safe-haven yen.
The rouble traded at 60.00 to the dollar after falling to as low as 67.1375 on EBS on Monday.
The Russian currency had tumbled over 50 percent against the dollar over the past half year on plunging oil prices and the West's sanctions linked to the Ukraine crisis. It jumped after the Russian central bank hiked its key interest rate to 17 percent from 10.5 percent.
"This is definitely a step in the right direction. The real interest rate right now is significantly positive, 7 to 8 percent," said Jorge Mariscal, chief investment officer for emerging markets at UBS Wealth Management in New York.
Still, the fate of the rouble - and of many other commodity currencies - rests on the price of oil, which showed no signs of bottoming out yet.
US crude futures fell 3.3 percent on Monday after OPEC once again said it will not cut oil output despite a global supply glut, and a UAE official opposed holding an emergency meeting of the producer group to support prices.
"As long as oil prices keep falling, the rouble will stay under pressure. We have to see whether the latest rate hike will turn around the rouble," said Shin Kadota, chief FX strategist at Barclays in Tokyo.
Plunging oil prices are hurting commodity currencies, with the Canadian dollar sliding to five-year lows and the Australian dollar at 4-1/2-year lows of $0.8201.
The Canadian dollar fell as low as C$1.1655 to the US dollar while the Australian dollar traded at $0.8212.
Investors, fretting that cheap oil prices could make it difficult for some energy producers to survive, are avoiding risk assets and moving into the safe haven yen.
The dollar traded at 117.87 yen, not far from a last week's low of 117.445.
The currency could test that level if the US Federal Reserve does not indicate that it is likely to raise rates next year after its two-day meeting starting from Tuesday.
The euro was little changed at $1.2445.
Comments
Comments are closed for this article.