Markets

Rouble steady as lower oil prices offset lucrative yields

Published October 4, 2017 Updated October 3, 2017 01:27pm

The rouble was little changed at 57.93 against the dollar as of 0721 GMT. Versus the euro, it eased 0.07 percent to 67.97, bouncing off its strongest level since mid-July of 67.80 it hit overnight.

The greenback got a boost, climbing higher against the euro, as investors weighed up the political fallout from the violent police crackdown on an independence vote in the wealthy region of Catalonia.

The stronger dollar pressured oil prices, which in turn limited the rouble's scope for firming. Brent crude futures were 0.2 percent lower at $56 per barrel.

But recovering economic activity at home spoke in favour of a stronger rouble, with analysts and economists upgrading their outlook and expecting a stronger economic growth together with lower inflation.

After a monthly PMI report on Monday showed Russia's manufacturing activity expanded further in September, Morgan Stanley analysts recommended selling the euro for roubles.

Morgan Stanley said they continued seeing the Russian currency as one of the most resilient to the globally firming dollar, adding that the rouble instruments should continue providing attractive yields.

Annual consumer inflation in Russia slowed to a post-Soviet lows of 3.3 percent in August, remaining below yields of 10-year Russian rouble bonds of 7.6 percent.

Russian share indexes inched higher. The dollar-denominated RTS index gained 0.4 percent to 1,133.0 points, while the rouble-based MICEX was 0.3 percent higher at 2,081.6 points.

 

Copyright Reuters, 2017