Rouble hits 90 vs euro for first time since 2016 as geopolitical risks bite

MOSCOW: The rouble plunged past 90 to a four-year low against the euro on Monday and at one point lost more than 1% on the day versus the dollar before paring some losses, as sliding oil prices and geopolitical factors played against the Russian currency.

Lingering political risks over turmoil in neighbouring Belarus hurt the rouble, as did the fallout from the suspected poisoning of Kremlin critic Alexei Navalny last month, with German Chancellor Angela Merkel on Monday not ruling out sanctions on Russia's Nord Stream 2 gas pipeline.

By 1254 GMT, the rouble was 0.7% weaker against the euro at 89.85, having earlier crossed the 90 threshold for the first time since February 2016.

Versus the dollar, the rouble was 0.8% weaker at 76.00 , just shy of a near five-month low of 76.26 hit earlier in the trading session, and had little impetus to regain ground.

"Activity at the start of this week is going to be light, as there is a holiday in the US today. The key event of the week is the ECB's policy meeting, which is scheduled on Thursday," VTB Capital said in a note.

Renat Malin of Sberbank Asset Management said the moderately high volatility in the rouble was set to continue in the near future, but expected it to then strengthen towards 73 to the dollar.

Prices for oil, Russia's main export, shed more than 1.5% after hitting their lowest since July, as Saudi Arabia made the deepest monthly price cuts for supply to Asia in five months and optimism about demand recovery cooled amid the COVID-19 pandemic.

Brent crude was down 1.7% at $41.93 a barrel.

Continued crackdowns by Belarusian authorities on mass demonstrations against President Alexander Lukashenko remained in focus due to concerns that Russia may intervene, which could trigger more sanctions against Moscow.

Market players also kept an eye on Navalny who, according to Merkel, was poisoned with Novichok, the same substance that Britain said was used against a Russian double agent and his daughter in an attack in England in 2018.

Russian stock indexes were mixed.

The dollar-denominated RTS index was down 0.4% to 1,215.4 points. The rouble-based MOEX Russian index gained 0.4% to 2,931.8 points.