Rouble slips to over two-month low vs dollar before c.bank rate decision

The Russian rouble weakened to a more than two-month low past 83 against the dollar on Friday, ahead of an expected interest rate hold, but with many anticipating the central bank to tighten its signal over future rate moves as inflation accelerates.

The Russian rouble weakened to a more than two-month low past 83 against the dollar on Friday, ahead of an expected interest rate hold, but with many anticipating the central bank to tighten its signal over future rate moves as inflation accelerates. At 0654 GMT, the rouble was 0.3% weaker against the dollar at 82.88, earlier hitting 83.04, its weakest since April 7.

It lost 0.3% to trade at 89.32 versus the euro . It shed 0.3% against the yuan to 11.63 . The rouble has been under pressure from rising geopolitical tensions and increased demand for foreign currency this week.

The rise in Russia's weekly consumer prices has accelerated sharply this month, data showed on Wednesday, justifying the central bank's decision to maintain a hawkish stance in the run-up to Friday's meeting. "Accelerating inflation in the first days of summer could provoke a tightening of the central bank's rhetoric," said Raiffeisen Bank analysts, forecasting a hold.

The central bank will announce its rate decision at 1030 GMT and Governor Elvira Nabiullina will shed more light on monetary policy and other issues at a media conference at 1200 GMT. Raiffeisen Bank added that the central bank is conducting monetary policy this year amid high uncertainty, particularly concerning fiscal policy.

Russia recorded a marginal budget surplus in May, but the deficit for the year as a whole far exceeds the annual plan, and many analysts anticipate that the finance ministry will exceed its 29.1 trillion rouble ($350.8 billion) expenditure target for 2023. "Given the pro-inflationary nature of this factor, we expect the central bank to tighten the signal," the analysts said.

Brent crude oil, a global benchmark for Russia's main export, was down 0.5% at $75.62 a barrel. ($1 = 82.9500 roubles)

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