August 23, 2018 / 12:31 PM / 3 months ago

UPDATE 2-Rouble falls again after short respite, c.bank halts FX buying

* Central bank halts daily FX buying until late September

* Move helps rouble firm from 69.01 vs dollar, weakest since 2016

* U.S. sanctions remain in focus, keep on pressing rouble (Updates prices, adds comment)

By Andrey Ostroukh and Polina Nikolskaya

MOSCOW, Aug 23 (Reuters) - The Russian rouble weakened again in afternoon trade on Thursday after taking a short respite from falling when the central bank suspended daily dollar purchases to ease pressure on the rouble battered by the prospect of new U.S. sanctions.

The central bank said it was halting the only recently resumed purchases for state reserves as of Thursday and until late September, just as the rouble slid to its weakest level since April 2016 earlier in the session.

Vladimir Miklashevsky, an economist at Danske Bank in Helsinki, said the suspension of dollar-buying by the central bank could help the currency firm by 0.5-0.8 roubles per dollar.

“But if geopolitical pressure on Russia from the United States increases and new sanctions are imposed in the autumn, the suspension of the central bank purchases will not change the direction for the dollar/rouble pair,” he said.

The rouble remains under pressure from fears of new Western sanctions, fuelled by recent statements from the United States in light of Special Counsel Robert Mueller’s investigation into alleged Russian meddling in the U.S. elections.

Washington is also expected to announce new sanctions against Russia in autumn related to the poisoning of Russia’s double agent Sergei Skripal and his daughter in Britain earlier this year. Moscow has denied involvement..

The rouble lost 0.25 percent on the day to 68.2 versus the dollar as of 1622 GMT, after hitting its lowest in more than two years at 69.01 per dollar earlier in the day.

Against the euro, the rouble firmed 0.2 percent to 78.76 , having touched 79.77 in early trade, its weakest level since April this year.

Russian stock indexes also took a hit. The dollar-denominated RTS index finished the trading day 2.0 percent lower at 1,043.99 points, while the rouble-based MOEX Russian index shed 1.6 percent to 2,260.04 points.

Shares in Russia’s largest bank Sberbank underperformed, falling 4.84 percent on the day, even though the lender reported a record high quarterly net profit.

RETHINKING POLICIES

A weaker rouble usually spurs inflation and curtails economic activity but boosts Russia’s budget revenues, since commodities are sold abroad for dollars.

Russian authorities have already acknowledged the need to revise economic forecasts. The economy ministry now sees the rouble averaging 61.7 per dollar this year compared with its earlier forecast of 60.8 roubles.

While helping the rouble trim losses, the central bank’s move to pause foreign exchange buying raised questions about the credibility of its policy as it came just days after it resumed purchases on behalf of the finance ministry despite this month’s heavy losses in the rouble.

“This is a positive decision for the market but it shows a lack of coordination among economic authorities and the financial market,” said Natalia Orlova, chief economist at Alfa Bank.

Alexei Pogorelov, chief economist at Credit Suisse in London said the rouble’s slide “may have already seriously affected the central bank’s monetary policy”.

Russia’s largest lender Sberbank said on Thursday it now expects the central bank to raise its interest rates later this year as inflation increases. The market had earlier expected the central bank to keep its key rate unchanged at 7.25 percent by the end of the year.

For Russian equities guide see

For Russian treasury bonds see (Reporting by Andrey Ostroukh, Polina Nikolskaya and Elena Fabrichnaya; Editing by Andrei Khalip)

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