After a 15-month low following attempted revolt, the rouble recovers. Investors responded for the first time to an aborted mercenary revolt in Russia over the weekend, sending the Russian rouble to its lowest level in nearly 15 months versus the dollar.
After topping 87.2300 in early trade, the rouble recovered to 84.53 by 1010 GMT.
After touching its lowest in almost two months against both currencies, it rose 0.3% to 92.07 against the euro and 0.5% to 11.66 against the yuan.
Mercenaries led by Yevgeny Prigozhin retreated from Rostov-on-Don overnight on Saturday in a deal that halted their swift advance on Moscow but raised questions about President Vladimir Putin’s power.
“Politics is again having a negative impact on investors’ mood,” said Alor Broker’s Alexey Antonov. “The peak of tensions has passed, but an unpleasant residue will linger for some time.”
Russian banks had provided exchange rates above 90 to the dollar over the weekend due to the rouble not trading, but tensions were reducing.
“The rouble in the cash market sold off sharply on Saturday with buy/offer spreads widening substantially,” Goldman Sachs wrote.
Goldman Sachs believes fiscal finances drive currency movements, but Russian authorities have enough resources to sustain the ruble.
“We expect a weaker rouble if the weekend events lead to more spending.”
First Deputy Prime Minister Andrei Belousov said foreign currency demand rose dramatically over the weekend in around 15 districts.
“On average, it was about 30%, but most active growth in demand for cash was recorded in southern regions – Voronezh, Rostov and Lipetsk, as well as large cities,” Belousov added. “Demand there increased by about 70-80%.”
Investors worldwide expected a rally into safe havens like U.S. government bonds and the currency after the foiled revolt.
Brent crude, Russia’s primary export, rose 0.4% to $74.17 a barrel.
Russian stocks fell.
Sinara Investment Bank said Friday evening’s “unexpected and dramatic events” caused a sell-off, but the weekend’s settlement prevented further selling.
“Market participants may be cautious for some time,” Sinara warned.
Dollar-denominated RTS index (.IRTS) fell 0.9% to 1,030.1 points. At 2,764.1 points, the rouble-based MOEX Russian index fell 1.1%.
After plunging substantially Friday night, most firms’ shares outperformed the main index.
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