MOSCOW: The rouble slid to a more than three-week low against the dollar in Moscow trade on Monday as oil prices fell and after the Russian currency lost the support of a favourable month-end tax period.
At 0729 GMT, the rouble was 1.1% weaker against the dollar at 62.30, having earlier touched 62.4875, its weakest point since July 7. It had lost 1.9% to trade at 63.66 versus the euro.
High oil prices and a strong current account surplus stemmed some losses last week, but the rouble still lost around 7% to the greenback.
“The rouble weakened steadily due to the end of the tax and dividend period,” said Dmitry Polevoy, head of investment at Locko Invest.
The tax payment period that usually sees exporting firms convert foreign currency revenues to pay local liabilities ended last week.
Polevoy said it was quite possible that the rouble could soon weaken temporarily to 63-65 against the dollar.
The market is also anticipating news that the government will soon tweak and reinstate Russia’s budget rule that diverts excess oil revenues into its rainy-day fund with a new cut-off price.
Dollar sinks to 6-week low to yen on bets for less aggressive Fed
Officials may also turn to currency interventions to try to curb the rouble’s strengthening.
The rouble is the world’s strongest-performing currency so far this year, boosted by measures to shield Russia’s financial system from Western sanctions imposed after Moscow sent troops into Ukraine on Feb. 24.
These include restrictions on Russian households withdrawing foreign currency savings.
Brent crude oil, a global benchmark for Russia’s main export, was down 0.5% at $103.4 a barrel, falling from early July highs struck last week.
Oil prices under pressure will impact the rouble, said Promsvyazbank analysts, suggesting a trading range for Monday of 61-63 against the dollar.
Russian stock indexes were falling. The dollar-denominated RTS index was down 1.5% to 1,112.9 points, while the rouble-based MOEX Russian index was 0.6% lower at 2,200.9 points.
Comments
Comments are closed.