Russian rouble slips ahead of OFZ bond auctions

MOSCOW: The Russian rouble weakened on Wednesday, hurt by falling oil prices and an uncertain global outlook though losses were limited ahead of treasury bond auctions that generally help buttress the currency.

At 0746 GMT, the rouble was 0.3pc weaker against the dollar at 70.94, having firmed almost 1pc in the previous trading session, and had lost 0.2pc to trade at 81.72 versus the euro.

Brent crude oil, a global benchmark for Russia's main export, was down 0.7pc at $44.0 a barrel.

The COVID-19 pandemic continued to weigh heavily on global markets as worldwide cases exceeded 15 million on Wednesday, but hopes for a vaccine and a strong stimulus plan from European Union leaders offered a boost to risk assets.

Some support for the rouble is likely to come from monthly tax payments that usually prompt export-focused companies to convert foreign currency revenue to meet local liabilities.

The Russian currency has more room to appreciate, said VTB Capital analysts, helped by the tax period and the fact that dividend payments by Russian companies, which prompt recipients to convert roubles into foreign currency, will start decreasing in August.

The finance ministry will test investors' appetite for Russian sovereign debt later on Wednesday, with two OFZ treasury bond auctions scheduled.

Demand for these bonds serves as a gauge of global market sentiment towards Russian assets.

The central bank is also in focus, with expectations that it will drop interest rates to a record low on Friday to cushion the economic blow from the COVID-19 pandemic.

Russian stock indexes were mixed.

The dollar-denominated RTS index was down 0.3pc to 1,255.9 points.

The rouble-based MOEX Russian index was 0.1pc higher at 2,827.0 points.