Russian rouble slides to one-month low vs dollar

MOSCOW: The rouble weakened on Wednesday, sliding to a one-month low against the dollar ahead of two OFZ treasury bond auctions, with the government’s foreign currency sales holding the Russian currency back from a more dramatic fall.

At 0739 GMT, the rouble was 0.6% weaker against the dollar at 71.59, its weakest mark since Jan. 9.

It had lost 1% to trade at 76.77 versus the euro and had shed 0.7% against the yuan to 10.53.

“Despite the introduction of a price ceiling on Russian oil products, the potential for a sharp weakening of the rouble is limited by the government’s activity on the foreign exchange market,” Egor Zhilnikov of Promsvyazbank said.

He expected the rouble to trade at 70.5-71.5 to the dollar on Wednesday.

Russia is now selling 8.9 billion roubles ($124.48 million) worth of foreign currency per day, compensating for lower oil and gas revenues, down 46.4% year-on-year in January.

Those slumping energy revenues and soaring expenditure pushed Russia’s federal budget to a deficit of about $25 billion in January, as sanctions and the cost of Moscow’s military campaign in Ukraine weigh on the economy.

The Bank of Russia raised a record $74 billion at a deposit auction on Tuesday from a banking sector flooded with excess liquidity, which analysts say could further limit room to ease monetary policy.

Russian rouble recovers after clipping near one-month low vs dollar

The central bank is widely expected to hold its key interest rate at 7.5% on Friday, but to give a more hawkish signal to the market as inflationary risks become more pronounced.

“Unfortunately, there are no theses that the rate will be lowered. The reason is that the situation with inflation looks unpredictable for now,” Anatoly Aksakov, head of the financial committee in Russia’s lower house of parliament, said in an interview with Russia’s parliamentary newspaper.

Brent crude oil, a global benchmark for Russia’s main export, was up 0.2% at $83.8 a barrel. Russian stock indexes were mixed.

The dollar-denominated RTS index was down 0.2% to 1,002.0 points.

The rouble-based MOEX Russian index was 0.5% higher at 2,277.8 points, slightly below a near five-month high hit on Tuesday.