Russian rouble pares losses as geopolitical risks linger

MOSCOW: The rouble pared losses on Monday after 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, while stock indexes rose amid higher oil prices.

At 1120 GMT, the rouble was 0.4% stronger against the dollar at 77.09, 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 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.

"Under any of the realistic scenarios, the chance of Russia significantly improving its geopolitical situation is virtually non-existent," BCS Brokerage said.

"Thus, it is safe to say that high investment risks are becoming a 'new normal' for the Russian market," it said, adding that the rouble is now fundamentally undervalued by 15-16%.

Otkritie Bank also noted the rouble is undervalued given that oil prices stay close to local highs and average 2019 levels, while restrictions on global tourism hamper demand for foreign currency.

Against the euro, the rouble gained 0.4% to 91.82 , still away from the 2021 peak of 87.13 seen a month ago.

Brent crude oil, a global benchmark for Russia's main export, rose 1.4% at $63.82 a barrel, supporting Russian stock indexes.

The dollar-denominated RTS index gained 1.8% to 1,442.7 points. The rouble-based MOEX Russian index was 1.3% higher at 3,531.5 points.

The recent market sell-off 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.

Shares in Russian metals producer Nornickel rose 4.2% after it said it would fully restart operations at one of two major mines hit by flooding earlier than previously expected.