Rouble returns to 73 vs dollar, pares sanction-driven losses

MOSCOW: The Russian rouble recovered to around 73 to the dollar on Monday after touching its weakest level since early June on renewed concerns about more US sanctions against Moscow over the poisoning of Kremlin critic Alexei Navalny.

The rouble strengthened last week after President Vladimir Putin and US President Joe Biden agreed to begin cybersecurity and arms control talks, though their summit highlighted discord on those issues, human rights and Ukraine.

But expectations that the US Federal Reserve may raise rates and threats of more sanctions have since battered the Russian currency.

At 1446 GMT, the rouble headed away from 73.3450 against the dollar, its weakest level since June 4, but was still down 0.2% on the day at 72.97.

The rouble fell after US National Security Adviser Jake Sullivan told CNN on Sunday the United States was "preparing another package of sanctions" related to the use of a chemical agent against "one of their citizens on Russian soil".

Kremlin critic Navalny was flown to Germany in August after being poisoned with what German doctors would later say was a military-grade nerve agent. Russian authorities have repeatedly denied any wrongdoing. Navalny later returned to Moscow and was jailed on charges he said were trumped up.

"We do not rule out that more sanctions could inflate the risk premium ... bringing the rouble-dollar rate back to 74-75," Sova Capital said.

Renaissance Capital said new sanctions looked unavoidable.

"We, however, expect sanctions to be delayed at least by two-tree months given the 'wait and see' rhetoric of Biden after the summit and to be tilted toward individual/diplomatic, as the first round was," RenCap said.

High prices for oil, Russia's key export, along with the central bank's plan to tighten monetary policy and a lack of clearly negative geopolitical developments keep the rouble from excessive weakening, Raiffeisen said.

Against the euro, the Russian currency slid 0.7% to 86.94 .

Russian stock indexes were mixed.

The dollar-denominated RTS index was 0.1% lower at 1,645.3 points. The rouble-based MOEX Russian index rose 0.2% to 3,810.2 points, heading back to an all-time high of 3,865.20 touched last week after a short-lived sell-off.