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Markets

Rouble hits 5-month low vs dollar as geopolitical fears bite

  • Brent crude oil, a global benchmark for Russia's main export, was steady at $62.75 a barrel, but that did not keep the Russian currency and stocks from falling in the past few days.
Published April 7, 2021
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MOSCOW: The rouble hit a five-month low against the dollar on Wednesday, battered by fears of another escalation of tensions between Moscow and the West.

At 0734 GMT, the rouble was 0.7% weaker against the dollar at 77.82 after hitting 77.96, a level last seen on Nov. 5.

Versus the euro, the rouble shed 0.7% to 92.35, its weakest point since late January.

Geopolitical concerns are growing as Russia started a planned combat readiness inspection of its army while NATO voiced concerns about a Russian military build-up near eastern Ukraine.

The Kremlin said its military movements posed no threat to Ukraine or anyone else after Russia had said a serious escalation in the conflict in Ukraine's Donbass region could "destroy" Ukraine.

"Notwithstanding the remoteness of a 'proxy' escalation in the Ukraine conflict, the larger concern remains that the US will levy more severe sanctions against Russia than prior to the flare up," BCS brokerage said in a note.

The finance ministry is in focus as it will offer OFZ treasury bonds at two auctions. OFZ bonds used to be popular among foreign investors and strong demand at such auctions usually supports the rouble. But the ministry had to cancel such auctions two weeks ago amid yet another rouble sell-off.

"The Finance Ministry is once again offering an uncapped amount of very long fixed-rate bonds on a pretty weak secondary market," Rosbank said in a note.

"If anything, this should imply the authorities are once again putting their faith in 'patriotic' bids from large market participants."

The sanction threat has pressured Russian assets for months. Such risks intensified in the second half of March when US President Joe Biden said Russian President Vladimir Putin would "pay a price" for meddling in US elections and cyber-hacking, allegations that Moscow denies.

Brent crude oil, a global benchmark for Russia's main export, was steady at $62.75 a barrel, but that did not keep the Russian currency and stocks from falling in the past few days.

The dollar-denominated RTS index slid 1.1% to 1,410.8 points. The rouble-based MOEX Russian index was 0.2% lower at 3,489.8 points.

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