Rouble falls past 75 to the dollar, selloff hammers bonds

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MOSCOW, Nov 23 (Reuters) – The Russian rouble slipped past the 75 mark against the dollar to its weakest since mid-2021 on Tuesday, hurt by fears of war with Ukraine that also triggered a massive sell-off on the government bond market.

At 1335 GMT, the rouble was 0.4% lower against the dollar at 75.07 after falling to 75.2925, its weakest point since July 8.

Against the euro, the rouble fell 0.8% to 84.52 .

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The rouble has come under selling pressure this month on Western concerns over possible Russian military intervention in Ukraine. Moscow has dismissed such suggestions as inflammatory and complained about increasing activity in the region by the NATO military alliance. read more

The rouble extended losses this week after Russia’s Foreign Intelligence Service likened the situation in Ukraine to the lead-up to the war in Georgia in 2008.

“There are no signs of de-escalation or easing on the immediate horizon but the hope is that there is no escalation. The rhetoric and headlines can be expected to dampen sentiment towards Russian assets again this week,” Alfa Bank said in a note.

“The rouble looks cheap now,” said Alexander Kudrin, chief strategist at Aton investment management firm, predicting its return to 70-73 to the greenback in coming months.

The market sell-off hit Russian OFZ treasury bonds. Yields on 10-year benchmark OFZs , which move inversely with their prices, soared to 8.66%, a level last seen in early 2019.

The finance ministry said it canceled weekly OFZ auctions due on Wednesday in an attempt to stabilise the market.

OFZ bonds are popular among foreign investors thanks to their lucrative yields and expectations that the central bank will keep its monetary policy tight for months to fight stubbornly high inflation.

The weaker rouble carries the risk of even higher inflation that dents living standards and remains one of the main concerns for Russian households.

The central bank did not immediately reply to a Reuters request for comment on the tanking rouble.

But Russian stock indexes pared some of the earlier losses and inched higher.

The dollar-denominated RTS index (.IRTS)rose 1.3% to 1,649.5 points. The rouble-based MOEX Russian index (.IMOEX)gained 1.6% to 3,933.9 points after hitting 3,776.61, its lowest since early August.

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Reporting by Andrey Ostroukh;
Editing by Giles Elgood and Bernadette Baum

Our Standards: The Thomson Reuters Trust Principles.



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