Russian rouble dives, central bank keeps rates unchanged

MOSCOW: The Russian rouble plunged on Friday due to a firmer dollar and lower oil prices as the central bank left interest rates unchanged at 4.25pc.

By 1053 GMT, the rouble was 1.2pc weaker against the dollar at 73.67, slipping away from a more than four-month high of 72.6475 hit on Thursday.

It lost 1pc to trade at 90.29 versus the euro.

The short-term outlook still looks good for the rouble, said Dmitry Polevoy, head of investment at Locko-Invest, but added that investors may prefer to lock in profits before the weekend and the upcoming holiday season.

Russia's central bank kept its key rate unchanged at a record low - in line with a Reuters poll - as inflation, its key responsibility, has exceeded the 4pc target following a slide in the rouble.

The rouble showed muted reaction to the rate decision, but an online media conference with Governor Elvira Nabiullina at 1200 GMT is more likely to impact the market, said Alor Broker analyst Alexei Antonov.

More interesting than Friday's rate decision is whether the central bank signals a change in its policy for the upcoming meetings in the first quarter of 2021, VTB Capital analysts said in a note.

Analysts polled by Reuters expect the central bank to lower interest rates in 2021 to boost a struggling economy.

President Vladimir Putin said on Thursday real incomes would fall around 3pc in 2020 due to the COVID-19 pandemic and pledged to dramatically lower the poverty rate, which has edged above 13pc.

Brent crude oil, a global benchmark for Russia's main export, was down 0.4pc at $51.30 a barrel.

Russian stock indexes were lower.

The dollar-denominated RTS index was down 2.1pc to 1,389.6 points.

The rouble-based MOEX Russian index was 1pc lower at 3,250.0 points after hitting a record high of 3,318.39 on Thursday.