Russian rouble steadies as OFZ yields climb on sanctions fears

MOSCOW: The rouble stabilised on Friday, hovering near the 73-mark versus the dollar, but pressured by fears of further sanctions on Russia's sovereign debt market and worries over the fate of debt-ridden property developer China Evergrande Group.

At 1045 GMT, the rouble was 0.1% weaker against the dollar at 72.90 and was steady versus the euro, trading at 85.54.

China Evergrande inched closer on Friday to a potential default, missing a payment deadline in one of the clearest indications yet that the developer whose debt struggles have spooked markets is in dire trouble.

A headwind for the rouble is the renewed threat of more US sanctions on Russia's sovereign debt market, which raised volatility in the government's OFZ treasury bond market in the previous session.

Yields on 10-year benchmark OFZ treasury bonds, which move inversely to their prices, touched 7.27% on Thursday, matching their highest mark since mid-July, but had returned to 7.25% on Friday.

"The biggest concern regarding the rouble's stability comes from OFZ dynamics," said Alor Broker in a note, attributing a sell-off in Russian government debt to the US proposals, but acknowledging that whether a decision would be made was still up in the air.

The Kremlin on Friday said it was clear that the United States' sanctions aspirations were not waning and that fresh measures would undermine hopes for the restoration of Moscow-Washington dialogue.

Risk appetite remained strong, with Brent crude oil, a global benchmark for Russia's main export, up 0.2% at $77.38 a barrel, earlier reaching its highest mark since early July as investors focused on tighter supplies.

Russian stock indexes were lower, but not far from record highs reached last week. The dollar-denominated RTS index was down 0.5% to 1,745.0 points. The rouble-based MOEX Russian index was 0.3% lower at 4,038.7 points, close to an all-time high of 4,081.98 points hit on Sept. 15.

Shares in Russian natural gas producer Novatek slipped around 2.1% in Moscow after the company's finance chief Mark Gyetvay was arrested in the United States on tax charges related to $93 million hidden in offshore accounts.