Rouble tumbles vs euro and dollar as US vote approaches

MOSCOW: The Russian rouble plunged to a near six-year low against the euro on Monday, plagued by falling oil prices, the persistent rise in COVID-19 cases at home and abroad, and uncertainty before Tuesday's US presidential election.

The Kremlin downplayed the crash in the rouble, saying Russia has been reducing its dependence on imports and preserving macroeconomic stability, while the central bank was helping to limit volatility.

The rouble has lost around 23% so far this year, becoming one of the worst-performing currencies against the dollar. It has shed almost 26% versus the euro.

By 1234 GMT, the rouble had lost 1.3% to trade at 93.80 versus the euro, earlier hitting 94.1425, its weakest since December 2014.

It was 1.3% weaker against the dollar at 80.54 , reaching levels not seen since March 23, a more than seven-month low, as investors preferred safe-haven assets ahead of the US vote.

"Markets are gearing exclusively to the outcome of the US elections, which is fraught with risk," BCS Global Markets said in a note.

Russian markets also see downside pressure from expectations that Democratic candidate Joe Biden could win the election, which may result in new sanctions against Russia.

Markets were waiting for volatility to subside after the US vote. A Reuters poll forecast the rouble would regain ground over the next year.

Any bets against the rouble are a high-risk trade because the currency is strongly over-sold, said Otkritie Broker analyst Andrei Kochetkov.

"Any outcome of the US election will be positive for emerging markets," Sberbank Asset Management said.

COVID IMPACT

Russia recorded more than 18,000 new coronavirus cases on Monday and 238 deaths, but authorities have so far played down the need for a return to heavy restrictions as the pandemic has already hit its economy.

Rising case numbers elsewhere and tighter restrictions, such as the promise of a new lockdown in the United Kingdom, added to pressure on riskier assets.

"Soaring COVID-19 infection rates, with Europe and the US continuing to set record highs, raise concerns over the global growth outlook and crude prices are tumbling this morning on worries over demand," Alfa Bank said in a note.

Brent crude oil, a global benchmark for Russia's main export, was down 1.52% at $37.36 a barrel, but Russian stock indexes were paring losses to climb away from multi-month lows.

The dollar-denominated RTS index was up 0.3% to 1,069.7 points, earlier touching a more than six-month low. The rouble-based MOEX Russian index was 1.6% up at 2,734.4 points.