Rouble up from 4-week lows, gov't bonds under pressure

MOSCOW: The rouble firmed on Friday, recovering from four-week lows, while Russian government bonds remained under pressure after the finance ministry indicated it could increase OFZ bonds offering.

At 0730 GMT, the rouble was 0.2 percent stronger against the dollar at 66.78, stepping away from its weakest level since Oct. 11 of 66.95 it hit a day earlier.

Against the euro, the rouble gained 0.3 percent to 75.76 .

It remains under pressure from a rising dollar after the U.S. Federal Reserve reaffirmed its hawkish monetary policy stance and stayed on course for a December interest rate hike.

The rouble felt some negative impact from selling pressure in the bond market ignited by the finance ministry's statement that it would like to offer more OFZ treasury bonds at its weekly auctions.

Yields in 10-year OFZ bonds, which move inversely with their prices, rose to 8.83 percent on Thursday and on Friday hovered at this level, its highest since Oct. 12.

OFZ prices fell after Konstantin Vyshkovsky, head of the state debt department at the finance ministry, said on Thursday the ministry is considering increasing the weekly offering of OFZ bonds to up to 30 billion roubles ($448.72 million) from 10-20 billion roubles in previous weeks.

Now, to stabilise the market and avoid a further drop in OFZ prices, the finance ministry would need to cancel its weekly auctions next week if the market mood does not improve by then, said Kirill Tremasov, head of research at Loko-Invest.

"Otherwise we will see yields above 9 percent," said Tremasov, who earlier served as the head of the economy ministry's macroeconomic forecasting department.

Russian stock indexes were down. The dollar-denominated RTS index was down 1.2 percent to 1,141.6 points, while the rouble-based MOEX Russian index fell 0.7 percent to 2,421.7 points.