MOSCOW: The Russian rouble slid to a two-week low against the dollar and euro in early Moscow trade on Monday, extending losses sustained in the previous session as the market awaited more information on possible currency interventions.
Russian stock markets slumped late last week after gas giant Gazprom cancelled dividend payments for the first time in more than two decades. The rouble, having lost the support of last week’s tax-driven dollar and euro sales, dived sharply away from more than seven-year highs reached on Wednesday.
At 0738 GMT, the rouble was 1.4% weaker against the dollar at 55.27, earlier dropping to 56.5050, its weakest point since June 20.
It had lost 1.3% to trade at 57.29 versus the euro , after also touching a two-week low of 58.90 in early trade.
Last Wednesday, Finance Minister Anton Siluanov said Russia could cut state spending and channel funds to foreign currency interventions to keep a lid on the rouble’s strengthening, which threatens budget revenues.
“We expect clarity on the interventions issue and volatile trading around 55 to the dollar this week,” said Dmitry Polevoy, head of investment at Locko-Invest.
The rouble has become the world’s best-performing currency this year, boosted by measures taken to shield Russia’s financial system from Western sanctions imposed after Moscow sent troops into Ukraine on Feb. 24.
The measures have included restrictions on Russian households withdrawing foreign currency savings.
The rouble’s strength has raised concerns among officials and export-focused companies, because it dents Russia’s income from selling commodities and other goods abroad for dollars and euros.
According to their statements, a rouble rate outside the range of 70 to 80 per dollar is not good for the authorities, said Alfa Capital analyst Alexander Dzhioev in a note.
“So there is not much difference between 50 and 60 roubles to the dollar in terms of how critical it is for the budget,” he said. “Both these levels are uncomfortable.” Russian stock indexes were mixed.
The dollar-denominated RTS index was down 0.2% at 1,274.0 points, after dropping to a near three-week low in early trade. The rouble-based MOEX Russian index was 1.3% higher at 2,234.5 points.
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