MOSCOW: The Russian rouble fell sharply on Monday after a meeting of major oil producers in Doha on Sunday failed to reach a deal to freeze global output, but losses were contained by a partial recovery in the oil price and by upcoming tax payments.
At 1120 GMT, the rouble was 2 percent weaker against the dollar at 67.79 and had lost 2.2 percent to 76.66 versus the euro.
In earlier trading the rouble had been down over 3 percent against the dollar compared with Friday's close, but recovered some ground after oil prices also clawed back losses.
Brent crude oil, a global benchmark for Russia's main export, was down 3.3 percent at $41.7 a barrel, after falling almost 7 percent in early trading.
Analysts said that oil's relative resilience was helping contain the rouble's losses, but warned that further falls in Brent were likely.
"The immediate drop in Brent, to $40/bbl, was less than expected; however, it is set to be under significant pressure throughout today as investors adjust to the situation," analysts at Sberbank CIB said a note.
"The failure of talks is most consistent with our 'abject failure' scenario."
The rouble had rallied with oil in the weeks leading up to the Doha meeting, where major OPEC producers and Russia had been expected to agree to freeze their production at January levels.
But the plan fell apart as Saudi Arabia was unwilling to sign up to the deal without the participation of its regional rival Iran, which has adamantly refused to join any freeze.
The failure to reach agreement appeared to surprise Russia. Energy Minister Alexander Novak said he had gone to Doha expecting to sign a deal and not merely debate one. He also said Russia was disappointed by the talks' failure but would continue discussing a possible freeze.
Igor Kovalev, an analyst at Instaforex, said in a note the rouble was likely to weaken into the range of 68-69 roubles per dollar on Monday and possibly to 70 in the coming days.
However, he said the negative impact on the rouble was limited by the oil price holding above $40 per barrel, and also by the need for exporters to sell forex in the run-up to Russia's end-of-month tax period.
Sberbank CIB analysts estimated that around $4 billion in forex would need to be sold in the lead-up to a tax deadline on April 25, when monthly Mineral Extraction Tax falls due.
"The week ahead should see the rouble receive some much needed support from key exporters in the lead-up to (the) tax deadline," they wrote.
Russian share indexes also fell sharply on Monday in reaction to the collapse of the Doha talks.
The dollar-denominated RTS index was down 3.2 percent to 876 points, while the rouble-based MICEX was 1.2 percent lower at 1,885 points.
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