Rouble falls with eye on geopolitics, rising COVID-19 cases in Russia

MOSCOW: The Russian rouble weakened against the dollar on Tuesday, heading back towards its weakest levels since March it touched last week, as geopolitical concerns and fears about rising cases of coronavirus in Russia kept steering the market.

Prospects of more sanctions against Moscow have plagued the rouble in recent weeks due to turmoil in neighbouring Belarus, the suspected poisoning of Kremlin critic Alexei Navalny and a military conflict in the South Caucasus.

At 0748 GMT, the rouble was 0.5pc weaker against the dollar at 78.55, having hit 79.9750 last week - the weakest level since March.

Against the euro, the rouble eased 0.5pc to 92.51, heading towards 93.32, its weakest level since early 2016 it hit a week ago.

Russia's daily tally of new coronavirus cases reached its highest since May 11, with a spike in daily cases in Moscow above 4,000 from levels of below 700 seen just a month ago, raising concerns about new possible lockdowns.

There are no reasons for further substantial weakening in the rouble without escalation of geopolitical risks, said Dmitry Polevoy, head of investment at Locko Invest.

In the short term, increased volatility will continue and the rouble may see pressure from the conversion of dividends by Russia's largest lender Sberbank, Polevoy said.

Russian stock indexes were up, supported by a recovery in Brent crude oil, a global benchmark for Russia's main export.

The dollar-denominated RTS index was up 0.4pc to 1,162.6 points.

The rouble-based MOEX Russian index was 0.6pc higher at 2,897.9 points.