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Rouble weakens beyond 60 per dollar as oil hits lowest since Nov
June 21, 2017 / 9:11 AM / 5 months ago

Rouble weakens beyond 60 per dollar as oil hits lowest since Nov

MOSCOW, June 21 (Reuters) - The Russian rouble weakened on Wednesday, breaking through the psychologically important level of 60 against the dollar for the first time since early February as oil prices headed to seven-month lows and geopolitical risks increased.

The rouble shed 0.7 percent to 60.07 versus the dollar as of 0822 GMT, briefly hitting 60.24, the level it last touched on Feb. 1.

The main driver of the rouble’s weakness was a sharp drop in prices of oil, Russia’s main export. Brent crude prices slid to $45.42, taking year-to-date losses to around 20 percent, the worst performance for the first six months of the year since 1997.

The Russian currency also came under pressure from concerns over relations between Moscow and Washington.

The Russian defence ministry said on Tuesday that a U.S. reconnaissance RC-135 plane had swerved dangerously in the proximity of a Russian Su-27 fighter jet over the Baltic Sea.

The incident, which resembles a Cold War conflict, came amid new sanctions on Russia, approved by the U.S. government, and expectations of more financial penalties over Russia’s role in the Syrian conflict and alleged meddling in the U.S. elections.

The rouble’s depreciation is driven by foreign investors who are “exiting the Russian debt market amid concerns over a new escalation in tensions between Russia and the U.S.”, Alfa Bank analysts said in a note.

However, the downside for the rouble is likely to be limited by demand for the currency from export-focused companies that need to pay month-end taxes, VTB Capital said in a note.

Alfa Bank said the rouble drop may not be the beginning of a large-scale deprecation, expecting the currency to stay within a range of 55-60 versus the dollar.

Versus the euro, the rouble eased 0.6 percent to 66.73, its weakest since Dec. 9, 2016.

Despite the geopolitical tensions, Russia managed to successfully tap the global capital market by selling two tranches of new dollar-denominated Eurobonds.

Russian stock indexes were down. The dollar-denominated RTS index dropped 0.6 percent to 975.2 points, while the rouble-based MICEX traded 0.1 percent lower at 1,856.5 points.

For rouble poll data see reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/fx-polls?RIC=RUB=

For Russian equities guide see

For Russian treasury bonds see

Russia in graphics: link.reuters.com/dun63s (Reporting by Polina Nikolskaya; Editing by Andrey Ostroukh and Susan Fenton)

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