MOSCOW: The rouble weakened to a seven-week low on Thursday, bruised by investor caution ahead of key central bank meetings and local demand for foreign currencies linked to obligations to pay off debts and interest in converting dividends.
Russian stock indexes also nodded lower, tracking a sell-off in Europe driven by diminished hopes that the US Federal Reserve will announce measures to support the economy.
By 1427 GMT, the rouble shed one percent to 32.51 versus the dollar and also eased by one percent to 36.21 against the euro-dollar basket, the level last seen on July 11.
"The reason behind the ongoing weakening in the rouble is locally increased demand for foreign currencies," said Ivan Sinelnikov at Gazprombank.
Dealers say foreign investors are seen converting rouble-denominated dividends, while banks and companies also bought foreign currencies to redeem around $14 billion of foreign debt in September, according to central bank data.
Versus the euro, the rouble gave up one percent to 40.72 , its weakest since early July.
The rouble also fell as investors were avoiding risky assets ahead of a widely awaited speech by the Fed Chairman Ben Bernanke due at Jackson Hole on Friday and the European Central Bank meeting on Sept. 6.
"Capital does not like uncertainty resulting from upcoming events, and eventually many (investors) are ditching emerging currencies. The rouble is not the only one," analysts at Nordea said in a note.
The rouble's slide, however, was tamed by month-end tax payments that usually prompt export-focused companies to convert dollars and euros to meet local liabilities. The central bank's forex interventions were also limiting losses in the rouble.
"The central bank is intervening (in) the forex market in a very limited way... But the fact that the rouble is being supported could locally cool down the sellers (of the rouble)," Nordea analysts said.
On the stock market, the rouble-traded MICEX index fell 0.5 percent to 1,429.5 points and its dollar-traded peer RTS was down 1.6 percent at 1,387.8 points.
"Since the S&P 500 index is hovering around 1,400 points all ideas have disappeared from the market. All assets are trading sideways and I don't think something will change tomorrow," said Igor Maximov at TCB Capital.
Players are closely watching the earnings season. Shares in Rostelecom were down 0.2 percent after the state-controlled telecoms operator reported a 3 percent rise in its second-quarter net profit.
In London, Russia's largest steelmaker Evraz saw a 2.3 percent fall after reporting a first half net loss, while Polyus Gold climbed 0.9 percent after more than doubling its six-month profit.
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