Russia not expected to stand up for tanking rouble amid sanctions
A threat of more U.S. sanctions has sent the rouble tumbling to its weakest since mid-2016 but authorities are not expected to leap the currency's defence after weathering a similar storm in April, analysts said.
"When we think about what has happened in April, when sanctions were introduced and we saw a similar reaction in the rouble ... this is not a move in the rouble that would make policy makers extremely worried," said Tilmann Kolb, an emerging market analyst at UBS Global Wealth Management in London.
Liza Ermolenko, an economist at Barclays in London, said that given the central bank refrained from intervening in the market in April, it is clear that a more sudden and deeper drop in the rouble would be required to make it step in now.
The authorities have made few public comments on the latest falls, which started on Wednesday, when the U.S. State Department announced a new round of sanctions that pushed the rouble to two-year lows and sparked a wider sell-off over fears Russia was locked in a spiral of never-ending sanctions.
On Friday the central bank said it had tools to prevent risks to financial stability, without specifying what they were.
As in April, the central bank has reduced its daily buying of foreign currency for state reserves this week to lift extra pressure from the rouble, which has fallen by around 15 percent versus the dollar so far this year.
Analysts say the other possible option to support the rouble would be a hike to the key interest rate, now at 7.25 percent, but this also seems to be off the table for now.
"At this stage we don't expect policymakers to resort to rate hikes," Ermolenko from Barclays said.
Kolb from UBS said he would "expect a bigger reaction when if we got perhaps towards 70 (roubles per dollar) but this also depends on how we get there, if at all".
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