MOSCOW: The rouble hit record lows against both the dollar and the dollar-euro basket on Monday, extending its recent slide amid strong demand for foreign currency and falling prices for oil, a major Russian export.
The rouble is down some 20 percent against the dollar this year, bruised by capital flight after sanctions imposed over the Ukraine conflict and large foreign debt payments by Russian companies shut out of overseas capital markets.
The Russian currency's decline has been exacerbated by recent dollar appreciation linked to expectations the U.S. Federal Reserve may raise interest rates sooner than the market expects, making U.S. assets more attractive.
"The rouble's fall is caused by global trends - the rouble is weakening against the dollar along with other emerging-market currencies. Added to this, you have a tightening of liquidity on the Russian currency market," said Sergei Romanchuk at Metallinvestbank in Moscow.
At 0850 GMT, the rouble was 1 percent weaker against the dollar at 39.57 and lost 1.14 percent to trade at 50.18 versus the euro.
That left the currency 1.08 percent weaker at 44.35 against the dollar-euro basket the central bank uses to gauge the rouble's nominal exchange rate, within touching distance of the 44.40 level at which the bank carries out unlimited interventions to defend the currency.
Monday marked the first time that the rouble had gone beyond 39.50 versus the dollar and 44.10 versus the basket.
Russian shares were also broadly lower, although signs of progress in a gas-pricing dispute between Russia and Ukraine provided limited support to some energy stocks.
On Friday, European Union and Russian officials suggested Ukraine and Russia were moving closer to a deal that would guarantee Kiev at least 5 billion cubic metres of gas for the next six months if Ukraine made pre-payments.
The rouble-based MICEX index traded 0.04 percent higher at 1,434 points. The dollar-denominated RTS felt the brunt of the rouble's depreciation to move 1.1 percent lower to 1,143 points.
"The bulls are still under pressure due to the weak rouble and cheapening oil, but progress between Russia and Ukraine on the gas question and the potential removal of sanctions are capable of providing a short-term boost to the (stock) market," analysts at Energo Kapital investment firm said in a note.
Among Russia's blue chips, state gas giant Gazprom was 0.4 percent higher, while VTB bank was 0.7 percent lower. Business conglomerate Sistema was down around 10 percent, with investors still uncertain as to the outcome of a criminal investigation into its chairman on money-laundering charges.
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