MOSCOW: The rouble slid on Tuesday towards 77 against the dollar and the MOEX benchmark stock index slipped below 3,500 points to its lowest since March, as a sell-off triggered by geopolitical concerns continued.
The rouble extended losses made over the past few weeks, following a short-lived recovery on Monday after German business newspaper Handelsblatt cited sources saying Western governments were no longer considering cutting Russia off from the SWIFT global payments system.
A spokesperson for the White House National Security Council rejected the Handelsblatt story. The Kremlin said there was no point in discussing media speculation.
By 1128 GMT, the rouble was 0.6% weaker against the dollar at 76.57 and down 0.4% to trade at 87.21 versus the euro.
"The rouble will remain volatile in the short term," said Dmitry Polevoy, head of investment at Locko Invest.
The rouble has been haunted by the stand-off between Moscow and the West. Russia says it is concerned about NATO's expansion, while the West says Moscow could be preparing to invade Ukraine. Russia denies any wrongdoing.
Russian rouble gives up gains to weaken as geopolitical risks weigh
Russia's five-year credit default swaps (CDS), a measure of the cost of insuring against a default, were at 206 basis points(bps), near their highest level since April of 215 bps reached overnight, data from IHS Markit showed.
Russia cancelled Wednesday's weekly OFZ treasury bond auctions, citing market volatility, after 10-year OFZ yields, which move inversely to their price, hit their highest since early 2016 at 9.52%.
A rapid increase in COVID-19 cases in Russia could also hamper risk appetite. Russia said it had so far recorded 1,682 Omicron cases across 42 regions. Markets are looking out for possible restrictions that can have a negative economic impact.
"Indeed, the situation remains highly uncertain and fluid. If geopolitical risks did ease, however, expect a bounce," BCS Global Markets said in a note.
The rouble could spend this week within a range of 76-77.5 versus the dollar and 86-88 versus the euro, Rosbank said.
Brent crude oil, a global benchmark for Russia's main export, hit a more than seven-year high of $88.13, but failed to support Russian financial markets.
The rouble-based MOEX Russian index was down 3.3% at 3,474.1 points after briefly touching 3,450.4, a level last seen in late March.
The dollar-denominated RTS index was down 4% to 1,427.8 points.
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