Rouble edges further down

The Russian rouble edged further down on Monday as oil prices touched a new 12-year low, but there was little sign of the panic among investors seen a year ago when the currency nose-dived. Russia has been hit hard by a collapse in crude prices that began in 2014, and looks set for further pain now that oil is brushing close to $30 per barrel - well below the $50 average assumed for this year by the government.
The rouble was down 0.7 percent against the dollar at 75.27 at 1240 GMT, and was down 1.7 percent versus the euro at 81.99. Russian share indexes were more heavily hit, reacting to slumping Asian markets as well as the falling oil price. The dollar-denominated RTS index was down 4.2 percent at 706 points, while the rouble-based MICEX was 3.5 percent lower at 1,687 points. Brent crude oil, a global benchmark for Russia's main export, was down 2.4 percent at $32.74 per barrel on Monday, having earlier touched 32.44, its lowest level since 2004.
Oil prices are being weighed down by worries about an economic slowdown in China, where stock markets fell again on Monday after plunging last week, which have compounded the effect of a global crude glut. "The reason for such a sharp devaluation of the rouble is oil," MFX Broker analyst Artem Zvyagilsky said in a note. "The fears of investors have strengthened concerning the Chinese economy, and also global demand for oil."
The renewed oil price plunge since the start of this year has dragged the rouble back towards a record low of 80.1 seen in December 2014, when the central bank had to hike its policy rate by 6.5 points to bolster confidence in the currency. This time, however, the decline has been more restrained, with little sign it is being driven by panic-selling among the general public - a factor that had influenced the central bank's intervention in 2014.
The rouble has shed 2.2 percent against the dollar so far this year - far less than Brent which has plunged by 12 percent. "Currently the rouble looks relatively good if you take into account the oil price," said ING's Russia economist Dmitry Polevoy. The rouble's performance partly reflects a stable balance of payments position, which has held up well despite the plunge in prices for exports such as oil, he added.
Russia recently revised up its estimate of the current account surplus in the third quarter of 2015, to $7.5 billion from $5.4 billion, illustrating how the country has been able to adjust to lower oil prices by reining in its demand for imports. The current account typically strengthens during the first quarter, a factor that should lend support to the rouble over the coming months.