Russian rouble down on lower oil prices as stocks also fall

Imaduddin December 25, 2018

MOSCOW: The Russian rouble weakened on Tuesday in thin Christmas holiday trading after oil prices fell heavily and Russian stocks tumbled amid a global sell-off.

Oil prices plunged to their lowest level in more than a year, fuelled by investor fears of a global economic slowdown.

Brent crude oil futures, the global benchmark for Russia’s main export, fell 6.19 percent to $50.49 a barrel on Monday putting downwards pressure on the Russian currency.

At 0737 GMT, the rouble was 0.45 percent weaker against the dollar at 68.90 and had lost 0.55 percent to trade at 78.60 versus the euro.

Despite the fall in oil prices, the rouble’s losses in the previous session were limited due to month-end tax payments, analysts at VTB Capital said in a note.

“Today this support may remain. Moreover, (forex) sales can be supported not only by planned taxes, but also by payment of export duties, pre-New Year bonuses, bonuses and expectations of a long weekend,” said Dmitry Polevoy, chief economist at the Russian Direct Investment Fund.

Local month-end tax payments usually prompt export-focused companies to convert their forex revenues into roubles in order to meet local duties, which supports the rouble.

Russian markets were also under pressure from a global sell-off. Wall Street stocks extended their steep sell-off after U.S. President Donald Trump blasted the Federal Reserve, describing it as the “only problem” for the U.S. economy.

Russian stocks indexes fell.

The dollar-denominated RTS index was down 3.24 percent to 1,035.22 points, its lowest level August 2017.

The rouble-based MOEX Russian index was 2.57 percent lower at 2,263.34 points, its lowest since August 2018.

Copyright Reuters, 2018

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