Rouble slumps towards 75 vs dollar as geopolitical risks wipe out recovery

MOSCOW: The Russian rouble slumped on Friday, moving to within a whisker of 75 against the US dollar and dragged down by lower oil prices and geopolitical risks as the new US administration turned its sights to its future relationship with Moscow.

The rouble had recouped losses from a sanctions-led sell-off on Monday that was fuelled by the arrest of Kremlin critic Alexei Navalny, but those gains evaporated and the currency slipped to its lowest since Jan. 11 versus the dollar.

By 1153 GMT, the rouble was 1.2% weaker against the dollar at 74.78, earlier slipping to 74.9975.

It had lost 1.4% to trade at 91.10 versus the euro , earlier hitting a two-week low.

President Joe Biden has tasked the US intelligence community for its full assessment on a range of Russia-related issues, the White House said on Thursday, including election interference and the use of chemical weapons against Navalny.

Adding to the geopolitical risks for Russian assets, police in Moscow on Thursday detained several of Navalny's allies, including his spokeswoman, for making calls online for unauthorised street protests to demand his release.

Some investors were also taking profits after an emerging market currency rally this week, driven by hopes of a $1.9 trillion U.S fiscal stimulus package.

Foreign currency sales by exporters could offer the rouble a lifeline, as the peak of a month-end tax period approaches, analysts said.

However, the rouble has now lost additional support from foreign currency sales after the finance ministry switched on Jan. 15 to purchases of 7.1 billion roubles ($95 million) worth of FX a day.

Brent crude oil, a global benchmark for Russia's main export, was down 2.3% at $54.83 a barrel.

Russian stock indexes fell, with the dollar-denominated RTS index down 3% to 1,420.0 points and the rouble-based MOEX Russian index 1.5% lower at 3,371.1 points.

Investors in Russian equities were exercising caution and engaging in profit taking ahead of protests planned in support of Navalny, said Alfa Bank in a note.