Russian rouble slips as oil prices, risk appetite fade

MOSCOW: The Russian rouble weakened on Monday, moving away from a two-week high hit on Friday, as declining oil prices and pessimism over a US stimulus package hurt riskier assets.

Geopolitical risks have plagued the rouble in recent weeks, including political unrest in Kyrgyzstan, turmoil in Belarus, a military conflict in the South Caucasus and the suspected poisoning of Kremlin critic Alexei Navalny. But some of the risks are waning now, analysts said.

By 1211 GMT, the rouble was 0.3pc weaker against the dollar at 77.97, pulling away from its strongest mark since Sept. 25 of 76.66 reached in the previous trading session.

It was steady, trading at 90.80 versus the euro.

Increased volatility in the rouble could continue this week, but the currency should stay within the range of 76-77.50 versus the dollar, said Dmitry Polevoy, head of investment at Locko Invest.

Brent crude oil, a global benchmark for Russia's main export, was down 1.5pc at $42.22 a barrel.

Riskier currencies slipped after negotiations over a new $1.8 trillion economic stimulus proposal from President Donald Trump's administration ran into resistance from congressional Democrats and Republicans, diminishing hopes for a coronavirus relief deal before the Nov. 3 election.

A two-day-old, Russian-brokered ceasefire over Nagorno-Karabakh looked increasingly fragile after Azerbaijan and ethnic Armenian forces accused each other on Monday of launching new attacks.

Investor optimism has weakened, but not vanished, said BCS Global Markets in a note, adding that US political battles, geopolitics, tensions over regional conflicts and persisting sanctions threats have not led to a massive sell-off in the Russian market.

Domestically, the central bank increased foreign currency sales to 8.6 billion roubles ($111.83 million) worth of forex a day.

The bank also injected 620 billion roubles into the banking system on Monday at two long-term repo auctions designed to prevent rouble liquidity shortages.

Russian stock indexes were rising.

The dollar-denominated RTS index was up 0.5pc to 1,169.5 points.

The rouble-based MOEX Russian index was 0.8pc higher at 2,857.2 points.