Russian rouble extends losses as central bank resumes buying FX

MOSCOW: The Russian rouble on Tuesday headed back towards its weakest level since April 2016, which it hit earlier this month, after the central bank said it resumed purchases of foreign currency for state reserves late last week.

The Russian currency has lost more than 7 percent of its value against the dollar so far in August, hit by threats of more U.S. sanctions and a sell-off in emerging markets sparked by Turkey's currency crisis.

At 1243 GMT, the rouble was 0.6 percent weaker against the dollar at 67.54, giving up earlier gains. Versus the euro, the rouble fell 0.8 percent to 77.71, its weakest since Aug. 13.

The rouble took a hit as central bank data showed it began buying foreign currency on Friday on behalf of the finance ministry, after putting daily buying of dollars and other currencies on hold for six days to ease downside pressure on the rouble.

"The finance ministry has disappointed today," said a currency dealer at a major Russian bank in Moscow.

By the end of the month daily purchases of foreign currency for reserves should now amount to $360 million if the finance ministry and the central bank want to fulfil the monthly plan, the dealer said, referring to the finance ministry's plans to buy the equivalent of 383.2 billion roubles of foreign currency for state reserves between Aug. 7 and Sept. 6.

"Only exporters can help the rouble now," he added.

Russian export-focused companies usually convert their dollar revenues to meet month-end taxes for which they need roubles.

Raiffeisen bank analysts said in a note the decision to resume state FX buying would limit room for the rouble's recovery.

Should the rouble firm to 66.5 versus the dollar, it could be an attractive level to buy into dollars, targeting dollar levels of above 68 roubles, Raiffeisen said.

Rhetoric and action from Washington towards Moscow remain in the spotlight.

U.S. President Donald Trump said in an interview with Reuters he would consider lifting sanctions on Russia if Moscow were to take steps to work with the United States on issues like Syria and Ukraine.

The Kremlin said on Tuesday it welcomed statements by U.S. President Donald Trump indicating a desire to cooperate with Russia, but added it would welcome concrete steps to actually improve relations.

Russian stock indexes were mixed. The dollar-denominated RTS index was down 0.4 percent at 1,061.17 points, while the rouble-based MOEX was 0.06 percent higher at 2,273.88 points.