Russian rouble weakens ahead of central bank rate decision

MOSCOW: The Russian rouble dropped in early trade on Friday due to a firmer dollar and lower oil prices ahead of a central bank meeting, where it is expected to hold interest rates.

At 0743 GMT, the rouble was 0.7pc weaker against the dollar at 73.32, slipping away from a more than four-month high of 72.6475 hit on Thursday.

It had lost 0.5pc to trade at 89.84 versus the euro.

Russia's central bank is likely to keep its key rate unchanged at a record low of 4.25pc as inflation, its key responsibility, has exceeded the 4pc target following a slide in the rouble, a Reuters poll showed.

The rate decision is due at 1030 GMT and will be followed by an online media conference with Governor Elvira Nabiullina at 1200 GMT, with the latter more likely to impact the market, said Alor Broker analyst Alexei Antonov.

More interesting than Friday's rate decision is whether the central bank signals a change in its policy for the upcoming meetings in the first quarter of 2021, VTB Capital analysts said in a note.

Analysts polled by Reuters expect the central bank to lower interest rates in 2021 to boost a struggling economy.

President Vladimir Putin said on Thursday real incomes would fall around 3pc in 2020 due to the COVID-19 pandemic and pledged to dramatically lower the poverty rate, which has edged above 13pc.

Brent crude oil, a global benchmark for Russia's main export, was down 0.4pc at $51.28 a barrel.

Russian stock indexes were lower.

The dollar-denominated RTS index was down 1.5pc to 1,398.2 points.

The rouble-based MOEX Russian index was 0.9pc lower at 3,254.9 points after hitting a record high of 3,318.39 on Thursday.