MOSCOW: The Russian rouble weakened to two-week lows on Wednesday, sliding beyond a psychologically important threshold of 60 against the dollar as oil prices nodded lower and risk aversion increased.
The rouble eased to 60.12 to the greenback, the level it last touched on June 22, bringing its losses since the beginning of the month to 2 percent.
"The key reason for such rouble behaviour is a factor of the balance of payment as well as investors' vanishing interest in Russian state debt," said Evgeny Volkov, head of brokerage at Rosevrobank.
The rouble is likely to weaken further this week unless a long-awaited meeting of Russian President Vladimir Putin and his US counterpart Donald Trump brings a solid improvement in relations between the two countries, Volkov said.
The Kremlin said it hopes the meeting between the two men, due to be held on the sidelines of the G20 summit in Germany on Friday, will establish an effective working dialogue.
But as Trump heads to his first face-to-face meeting as president with Putin, he is under pressure at home to take a tough line with the Kremlin following allegations of Russian interference in last year's US election.
Geopolitical tensions usually add to risk aversion, putting selling pressure on Russian assets.
As of 1318 GMT, the rouble was down 0.8 percent at 59.88 per dollar and had shed 0.7 percent to 67.82 versus the euro.
Lower oil prices also played on the downside for the rouble as Brent crude, a global benchmark for Russia's main export, declined by 0.6 percent to $49.3 a barrel.
The rouble was little moved by the finance ministry's decision to cut daily purchases of foreign currency to minimum levels in July.
Dmitry Polevoy, chief economist at ING Bank in Moscow, said any market impact of the finance ministry's interventions "could be ignored". He said ING expected the rouble to ease further to 61.8 versus the dollar by the end of September and then to 62.6 by the end of the year.
The weaker rouble had a positive impact on the rouble-traded Micex index, which added 0.3 percent to 1,922.7. But the sliding currency battered the dollar-traded RTS, which fell 0.6 percent to 1,011.2.
Comments
Comments are closed for this article.