Rouble falls again after brief recovery, geopolitical risks in focus

MOSCOW: The Russian rouble eased in afternoon trade on Monday, paring earlier gains as it remained under pressure from political risks related to the crisis in Belarus and the alleged poisoning of Kremlin critic Alexei Navalny.

The rouble slipped 0.3% to 74.20 versus the dollar as of 1409 GMT, heading away from the session peak of 73.61 and moving towards a four-month low of 76 versus the greenback that it hit last week.

The rouble tumbled last week after Russian President Vladimir Putin said the Kremlin had set up a "reserve police force" to support Belarusian leader Alexander Lukashenko.

Street protests over alleged election fraud continued in Belarus over the weekend as Lukashenko and Putin agreed to meet in Moscow in the next few weeks.

The rouble is widely expected to recover ground over the next year when political risks subside, a Reuters monthly poll showed on Monday.

"Geopolitical tensions would likely need to ease for the rouble to make further gains, and it is hard to count on this happening in the near term," Sberbank CIB said.

Russia risk may have already peaked last week, BCS brokerage said. "Still, there is little to celebrate just yet and a wait-and-see approach from investors is likely - caution unlikely to inspire a rally - but a slight recovery may be evident after last week's poor showing," BCS said.

The rouble is likely to stay in the upper half of the 70-75 range against the dollar in coming days, Promsvyazbank said.

The Russian currency is "visibly cheap versus its fundamentally justified levels," said VTB Capital.

Against the euro, the rouble was 0.7% weaker at 88.65 , having slipped past 89.80 last week for the first time since early 2016.

Brent crude oil, a global benchmark for Russia's main export, was up 0.3% at $45.95 a barrel, failing to buttress Russian stock indexes on the last trading day of the month.

The dollar-denominated RTS index was down 0.3% at 1,262.0 points. The rouble-based MOEX Russian index was 0.2% lower at 2,974.8 points.

Shares in Gazprom underperformed the broader market, sliding 1% to 181.13 roubles ($2.44) per piece after the natural gas giant said its net profit more than halved in the second quarter.