Russian rouble hits near 1-year low vs dollar amid lower FX supply

MOSCOW: The Russian rouble touched a near one-year low against the dollar and euro on Wednesday, hampered by lower FX supply and capital outflows amid limited liquidity, even as oil prices held near recent highs.

At 0755 GMT, the rouble was 0.2% weaker against the dollar at 79.70, its weakest point since April 19, 2022. It had lost 0.6% to trade at 87.35 versus the euro , also a near one-year low, and had shed 0.6% against the yuan to 11.57.

"Since the start of the year, there has been consensus on the market that the rouble would weaken, but few expected it at such speed," said Dmitry Polevoy, head of investment at Locko-Invest. Polevoy said capital outflows, from Western investors selling assets, wealthy Russians converting roubles and periodic Eurobond payments that require swift conversion into hard currency, were partially behind rouble weakness.

"We believe the sharp movements of recent days have a largely local character and are formed under the influence of shrinking liquidity on the FX market," said Veles Capital in a note, expecting the rouble rate to stabilise soon. Brent crude oil, a global benchmark for Russia's main export, was up 0.3% at $85.2 a barrel, boosted this week by surprise production target cuts from OPEC+.

Although higher oil prices usually boost the rouble, reduced FX supply is hurting the Russian currency. Month-end tax payments that usually see exporters convert foreign exchange revenues into roubles were due last week. Russian stock indexes were mixed.

The dollar-denominated RTS index was down 0.1% to 982.3 points. The rouble-based MOEX Russian index was 0.2% higher at 2,484.6 points, not far from its highest mark since April 2022, hit on Tuesday. Shares in state lender VTB slid 5.5% after the bank reported a sanctions-induced $7.7 billion 2022 loss, but said it expects to bounce back with record profits this year, boosted by the purchase of rival Otkritie Bank and a profitable start to the year.

The finance ministry will hold two OFZ treasury bond auctions on Wednesday.