MOSCOW: The Russian rouble extended gains in late trade on Tuesday after reports that U.S. President Joe Biden had a phone conversation with his counterpart Vladimir Putin, as the market kept a close watch on geopolitical tensions between Moscow and the West.
Biden proposed a summit meeting with Putin in a third country in coming months, while calling on Russia to de-escalate tensions, the White House said.
The rouble reacted immediately, surging briefly past the 76 mark against the dollar for the first time since early April. It was up 1.6pc at 76.13 versus the dollar at 1546 GMT, moving away from 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 in the price of crude oil, Russia's key export, as it was hammered by fears about the situation in Ukraine.
Moscow on Tuesday warned the United States to stay away from Russia and Crimea, while U.S. Secretary of State Antony Blinken offered Washington's full support to Ukraine in its conflict with Russia.
The rouble and Russian bonds had earlier taken a hit after U.S. President Joe Biden said in March his Russian counterpart, Vladimir Putin, would "pay a price" for efforts to meddle in the 2020 U.S. presidential election, allegations that Moscow denies.
"We expect the rouble's weakness to continue in 2Q20 until the milestones on the sanctions timeline pass, as well as tensions in Eastern Ukraine ease," said Sova Capital chief economist Artem Zaigrin.
In early 2020, when oil prices stood near current levels, the rouble was at around 63 against the greenback.
Its weakness filters into consumer prices and dents living standards, while prompting Russia's central bank to consider raising borrowing costs.
The rouble gained 1.4pc against the euro to 90.88, its strongest since April 6. A year ago, it traded near 80 against the euro.
Brent crude oil was up 0.9pc at $63.83 a barrel, buttressing Russian stocks.
The dollar-denominated RTS index rose 1.8pc to 1,458.5 points.
The rouble-based MOEX Russian index was up 0.1pc to 3,527.1 points.