MOSCOW: The Russian rouble plunged to 2012 lows on Wednesday, hit by a grim mood on European markets as end of month sales of hard currencies tailed off, and analysts said it was likely to fall further in coming days.
Stock markets also continued to suffer from a shortage of liquidity which has forced Russian banks to sell shares to raise cash. Shares in Russian energy company TGK-11 gained 0.15 percent after state-controlled power firm InterRAO offered to buy its shares for 0.15 roubles each.
The rouble, which rarely sees moves of more than half a percent inside a relatively tight central bank trading band, shed 1.2 percent on the day to 32.55 against the dollar by 0757 GMT, its weakest since early October. Versus the euro, it gave up 0.5 percent to 40.54
Versus the euro-dollar basket, used by the central bank as a gauge of its broader strength, the rouble eased 0.8 percent to 36.14, moving within the range where the central bank sells a hundred million or a few hundred million of dollars a day to ease downside pressure on the rouble.
Following the end of monthly tax payments, the rouble's dip accelerated after it had weakened beyond the mark of 35.95 versus the basket, a 61.8 percent Fibonacci retracement of the rouble's advance from October to March.
"After getting rid of restraints such as selling of foreign currencies to meet month-end taxes, the rouble broke free and fell into an abyss," analysts at ING said in a note.
"A fall in the euro, oil prices, emerging market currencies, reacting to every negative piece of new from euro zone, practically does not leave the rouble any chance to survive in the coming days," they said.
Rosbank economist Vladimir Tsibanov said he thought the currency now looked oversold but said the prevailing uncertainty was likely to last at least until Greek parliamentary elections on June 17.
On the money market, liquidity strains intensified even after the end of monthly tax duties as players sought liquidity, struggling to raise funds in repo operations with the central bank by providing bonds as collateral.
"Some papers, used as collateral in repo, could have been ditched during a sell-off in risky assets," said Vorobyov, referring to increased demand for liquidity in the OTC market, which pushed overnight interbank lending rates to its highest since early 2010 of above 6 percent.
In order to free funds and minimise exposure to risky assets, investors were also selling shares.
The dollar-based RTS index fell 2 percent to 1,280.5 points and the rouble-traded MICEX gave up 1.1 percent to 1,312.5 points.
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