Rouble weakens past 59 vs dollar, falls back sharply vs euro

The rouble weakened past 59 against the dollar on Tuesday and slumped against the euro, giving up most of the previous session's gains, as concerns over possible new sanctions against Moscow continued to buffet the Russian currency.

The rouble weakened past 59 against the dollar on Tuesday and slumped against the euro, giving up most of the previous session's gains, as concerns over possible new sanctions against Moscow continued to buffet the Russian currency. The rouble has experienced significant swings in recent sessions, hampered by limited liquidity and investors' concerns that any new sanctions over Russia's actions in Ukraine could restrict access to foreign currency in Moscow.

By 1509 GMT, the rouble was 0.6% weaker against the dollar at 59.23​ and had lost 5.3% to trade at 56.42 versus the euro. It had firmed 0.2% against the yuan to 8.25. "The accounts of many Russian companies in Europe are at risk of being frozen, either by the European Union as part of a new sanctions package, or by local authorities," said Otkritie Research in a note.

Poland froze the assets of Gazprom Export, a unit of Russian energy giant Gazprom, last week. The rouble may come under pressure amid a low supply of foreign currency by exporters, said Banki.ru chief analyst Bogdan Zvarich.

A month-end tax period that usually sees export-focused firms convert FX revenues to meet local liabilities ended last week. The rouble moved lower after Russia's finance ministry cancelled Wednesday's OFZ bond auction, citing financial market volatility. Yields on Russia's benchmark 10-year OFZ treasury bond hit their lowest since Sept. 19 of 9.71% before climbing back up to 9.81%.

Yields move inversely to their price. Russian stock indexes, supported late last week by Gazprom approving interim dividends, pared earlier gains to slip back.

"The liquidity factor should give a further boost to the markets as money from Gazprom dividends flows to the market," said BCS Global Market. The dollar-denominated RTS index was down 0.6% at 1,085.9 points, while the rouble-based MOEX Russian index was unchanged at 2,041.4 points, after earlier reaching its strongest since Sept. 23.

Brent crude oil, a global benchmark for Russia's main export, rose 3.4% to $91.9 a barrel amid expectations producer group OPEC+ could agree to large output cuts this week. SPB Exchange, Russia's second-largest bourse which specialises in foreign shares, said on Tuesday it would start trading of four Chinese companies listed on the Hong Kong Stock Exchange from Oct. 5.​

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