By Andrey Ostroukh
MOSCOW, March 9 (Reuters) - The Russian rouble crashed to its weakest levels since early 2016 on Monday, dragged down by oil prices that plummeted after Russia failed to reach an oil output agreement with OPEC and Saudi Arabia slashed its selling prices for crude.
The rouble slumped to 73.50 versus the dollar on the interbank market as of 0734 GMT RUB=, a level last seen in early March 2016.
Against the euro, the rouble was at 84.77 EURRUB=, its weakest since late February 2016.
On Friday, the rouble finished trading on the Moscow Exchange at 68.57 against the dollar RUBUTSTN=MCX and 77.51 versus the euro EURRUBTN=MCX.
The rouble slid as prices for oil plummeted around 30% on Monday after Saudi Arabia slashed prices and set plans for a dramatic increase in crude production next month, starting a price war even as the spread of the coronavirus erodes global demand growth. O/R
Yet another drop in the rouble and oil prices could be sensitive for authorities and President Vladimir Putin, who last week blamed low oil prices on falling household incomes in Russia.
The falling rouble usually fuels concerns about inflation as the rising exchange rates of the dollar and the euro filter into prices in Russia as imports become more expensive.
Rapid moves in the rouble also suffocate business and investment activity as companies tend to play on forex markets or buy into foreign currency instead of focusing on their business.
Russian authorities were quick to respond to the rouble's fall on Monday, a non-working day and part of Russia's long weekend after a state holiday for Women's Day on March 8.
The central bank suspended its daily purchases of foreign currency for state reserves for 30 days, in an attempt to ease downside pressure on the rouble.
"The Bank of Russia is monitoring the situation on the financial market and is ready to engage additional instruments in order to preserve the financial stability," it said.
Oil prices have been under pressure in the past few weeks and extended losses after Russia balked at making a further steep output cut proposed by OPEC to stabilize oil markets hit by worry over the economic impact of the coronavirus.
Brent crude futures were down 25.3% at $33.77 a barrel LCOc1 after earlier dropping to $31.02, their lowest since Feb. 12, 2016.
Brent futures are on track for their biggest daily decline since Jan. 17, 1991, at the start of the first Gulf War.
Fitch rating agency said the drop in oil prices towards $30 per barrel poses risks of the rouble devaluation and budget deficit, the RIA state news agency reported.
Russian authorities said last week, before the latest sell-off in oil prices and the rouble, that Russia was fiscally prepared to cope with a drop in oil prices, pointing at Russia's international reserves of $570 billion.
For Russian equities guide see RU/EQUITY
For Russian treasury bonds see 0#RUTSY=MM
(Reporting by Andrey Ostroukh; Editing by Alex Richardson)
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