Rouble heads to 5-month low vs dollar as geopolitical fears linger

  • The rouble-based MOEX Russian index was 0.1% lower at 3,482.5 points.
12 Apr, 2021

MOSCOW: The rouble weakened on Monday, heading towards a five-month low against the dollar as concerns about Russia's military build-up near the Ukrainian border weighed on market sentiment.

At 0732 GMT, the rouble was 0.3% weaker against the dollar at 77.66, moving towards its weakest level since Nov. 5 of 78.0450, which it touched last week.

The rouble decoupled recently from moves in other emerging markets as well as the price of crude oil, Russia's key export, as it was hammered by fears about the situation in Ukraine.

Russia has started a planned combat readiness inspection of its army, while NATO has expressed concerns about a Russian military build-up near eastern Ukraine.

The rouble also came under pressure from economic factors. Russia's current account surplus fell in the first quarter as the country's exports shrank, meaning an inflow of foreign currency into the economy waned.

"Weak oil exports, fast growth in imports, accompanied by a high preference for foreign assets by residents and risk-off mood by portfolio investors are important obstacles for the rouble in returning to the 70-75 range (versus the dollar) in the second quarter," ING said in a note.

"A return into the 70-75 range is still possible in the second half of 2021 provided foreign policy newsflow stabilises and reopening of foreign travel in 2H21 is gradual."

Against the euro, the rouble shed 0.1% to 92.23 , hovering away from the 2021 peak of 87.13 seen a month ago.

Brent crude oil, a global benchmark for Russia's main export, was down 0.7% at $62.51 a barrel, putting pressure on Russian stock indexes.

The dollar-denominated RTS index slid 0.3% to 1,413.1 points.

The rouble-based MOEX Russian index was 0.1% lower at 3,482.5 points.

The negative backdrop, however, did not prevent Russian forestry group Segezha from announcing plans to hold an initial public offering of ordinary shares on the Moscow Exchange.

Segezha, controlled by conglomerate Sistema, said the IPO would involve a primary offering of newly issued shares to raise at least 30 billion roubles ($387 million) and an over-allotment option of secondary shares.

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