Russian rouble reverses course to weaken under oil price pressure

The Russian rouble gave up early gains to weaken on Friday, under pressure from a sharp drop in oil prices, but supported by the upcoming month-end tax period that tends to increase foreign currency supply. By 1039 GMT the rouble was 0.5% weaker against the dollar at 84.46 and had gained 0.4% to trade at 91.83 versus the euro.

The Russian rouble gave up early gains to weaken on Friday, under pressure from a sharp drop in oil prices, but supported by the upcoming month-end tax period that tends to increase foreign currency supply.

By 1039 GMT the rouble was 0.5% weaker against the dollar at 84.46 and had gained 0.4% to trade at 91.83 versus the euro. It had shed 0.4% against the yuan to 11.70. "We believe the dollar-rouble pair could finish trading with a slight decline in the 83-85 range in the run-up to the weekend, however no clear drivers to exit the corridor are being observed yet," said Promsvyazbank analyst Egor Zhilnikov.

The rouble weakened around 2% against the dollar last week, hitting a more than 14-month low, blighted by volatile swings in a low liquidity market. In response, senior officials suggested that an exchange rate of 80-90 per dollar was preferable. The rouble is now being supported by the approach of monthly tax payments that usually sees exporters convert foreign exchange revenues to settle local liabilities.

Brent crude oil, a global benchmark for Russia's main export, was down 1.2% at $73.23 a barrel, extending losses from the previous session, in which it had opened above $77. "The deteriorating situation on the energy market ... will restrain the national currency's growth," said Banki.ru Chief Analyst Bogdan Zvarich.

Russian stock indexes were at their lowest in about a week The dollar-denominated RTS index was down 1.5% to 1,040.7 points. The rouble-based MOEX Russian index was 0.9% lower at 2,789.6 points.

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