Rouble rebounds from weakest levels vs dollar since March

MOSCOW: The Russian rouble firmed on Wednesday ahead of government bond auctions but remained near recent lows under pressure from mounting risk aversion.

Russian assets have come under selling pressure this week from fears the country would be dragged into the military conflict in the South Caucasus.

"An important point is that the recent rouble weakness is not a response to a deterioration in fundamentals but a reflection of growing geopolitical risk," Alfa Bank said.

At 0905 GMT, the rouble was 0.9pc stronger against the dollar at 78.37, heading away from its weakest point since late March of 79.9750 it hit on Tuesday.

Rising coronavirus cases at home also weighed despite Russia saying it has completed clinical trials of a second potential vaccine against COVID-19.

The rouble is seen floating within a range of 78-79 against the dollar on Wednesday after its rapid depreciation of the past days, said Dmitry Polevoy, head of investment at Locko Invest.

"The best case for Russia now is the exchange rate remaining in a RUB75-80/$ range; however, given the growing concerns over a second wave of lockdowns the exchange rate could move to a RUB80-85/$ range," Alfa Bank said.

The rouble, which lost around 20pc of its value against the dollar so far this year, may obtain support from state-run companies that have been told to revise the limit of net foreign exchange assets, Interfax news agency reported late on Tuesday.

Against the euro, the rouble gained 1.1pc to 91.84, trading near its weakest level since early 2016 of 93.32 it hit on Tuesday.

The finance ministry is in focus as it will test market appetite for its OFZ treasury bonds, popular among foreign investors, and will also disclose its borrowing plan for the fourth quarter.

Brent crude oil, a global benchmark for Russia's main export, was down 0.4pc at $40.60 a barrel, extending losses as rising coronavirus cases prompted global concerns about restrictions on activity that could curb fuel demand.

On the stock market, Russia's top shipping company Sovcomflot was in the spotlight as it announced a plan to sell an up to 17pc stake in new shares in Moscow and raise around $534 million amid globally suppressed risk appetite.

The dollar-denominated RTS index was up 0.8pc to 1,165.3 points.

The rouble-based MOEX Russian index was 0.3pc lower at 2,902.2 points.