Russian rouble, stocks fall amid crisis in neighbouring Belarus

MOSCOW: The Russian rouble weakened on Monday, underperforming its emerging market peers and shrugging off stable oil prices, as players contemplated the political crisis in neighbouring Belarus.

Having stabilised in early trade, the rouble fell to 73.80 versus the dollar, a four-day low. As of 1630 GMT, the rouble was 0.8% down on the day at 73.45.

Belarus leader Alexander Lukashenko said on Monday he would be ready to hold new elections and hand over power after a constitutional referendum, an attempt to pacify mass protests and strikes that pose the biggest challenge yet to his rule.

However he insisted the offer would not be delivered on while he was under pressure from protesters.

"Foreign investors fear that under particular scenarios Russia could be dragged into its (Belarus's) internal conflict with possible unfavourable external political consequences, such as extra sanctions," said Valentin Zhurba, head of the investment department at MKB Private Bank.

Russia dollar-denominated sovereign bonds fell, with the September 2043 issue shedding 3.3 cents, its biggest daily fall in nearly four months, according to Tradeweb.

The events in Belarus do not pose a direct threat to the rouble, but "any escalation of the political situation in a particular country is always negative for currencies of its neighbours," said Alexei Antonov, chief analyst at Alor Brokerage.

Later this month the rouble may receive support from local taxes that prompt some companies to convert their revenues.

"During the upcoming week, the rouble could receive tailwinds from hard-currency selling by exporters ahead of tax payments - the bulk of them is scheduled on next Tuesday," VTB Capital said in a note.

BCS Brokerage said the rouble may strengthen to around 70-71 versus the dollar closer to the end of August or in September if oil prices do not fall.

Against the euro, the rouble was 1% weaker at 87.08 .

Brent crude oil, a global benchmark for Russia's main export, was up 0.6% at $45.07 a barrel following news China plans to ship large volumes of US crude, which outweighed concerns over a slowdown in demand recovery after the coronavirus pandemic and an uptick in supplies.

Russian stock indexes pared earlier gains and slid from their highest levels since late February.

The rouble-based MOEX Russian index ended the day 0.3% lower at 3,052.5 points. The dollar-denominated RTS index was down 1.1% at 1,308.7 points.