MOSCOW: The rouble fell sharply on Monday, extending its decline and prompting renewed central bank support, despite getting a slight boost from Standard & Poor's decision to keep Russia's sovereign debt rating unchanged.
At 1430 GMT, the rouble was down 0.63 percent at 42.17 against the dollar and 1.03 percent weaker at 53.60 versus the euro, after earlier hitting new all-time lows against both currencies.
The Russian currency has been hammered for months by risk aversion to Russian assets because of the Ukraine crisis, falling oil prices and Western sanctions restricting Russian firms' access to international capital.
Brent crude oil futures dropped again on Monday, falling below $85, and some analysts' expectations that the central bank could let the rouble float freely in the coming weeks added further pressure to the rouble.
"The Russian central bank is not yet able to stop the national currency's slide, neither with currency interventions, which are already likely to have exceeded $18 billion since the start of October, nor with the upcoming launch of weekly repo auctions in dollars," Ivan Kopeikin, a forex analyst at BCS Express, said in a note.
The central bank said on Monday it had spent $2.7 billion in just one session on Thursday in defence of the currency, and traders said the bank had likely spent over $1.5 billion in additional interventions on Monday.
Traders said forex sales by Russian exporters were relatively limited by mid-afternoon trading.
Exporters typically give the rouble a lift towards the end of the month by converting their foreign currency earnings into roubles to pay taxes, but are now holding onto as much forex as they can, in part due to sanctions restricting access to Western markets.
S&P RELIEF
Standard & Poor's ratings agency affirmed Russia's sovereign rating after market close on Friday at a notch above junk status, providing some relief to investors in Russian assets, some of whom had feared a downgrade was likely.
Some analysts also say interest in the rouble could return after Ukraine's parliamentary election, which took place on Sunday, and the resumption of gas talks between Moscow and Kiev.
"Positive expectations about the results of the (Russia-Ukraine) gas talks that are to resume on Oct. 29 may also fuel interest in the rouble," Natalia Samoilova, head analyst at Golden-Hills Kapital in Moscow, wrote in a note.
President Vladimir Putin said last Friday he hoped that a deal in the long-running price dispute between the two neighbours could be reached this week.
Russian shares were broadly higher on Monday, mainly on the S&P news and in contrast to bearish sentiment on European stock markets, with the rouble-based MICEX index trading 0.8 percent higher at 1,391 points. The dollar-based RTS was 0.3 percent higher at 1,039 points.
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