Rouble retreats from one-month high as rising COVID-19 cases limit risk appetite

Credit: REUTERS/Maxim Shemetov

The rouble weakened on Monday, pulling away from a one-month high as rising coronavirus cases around the world and opinion polls showing a solid lead for Democrat Joe Biden in the U.S. presidential election reduced appetite for Russian assets.

By 1324 GMT, the rouble was 0.3% weaker against the dollar at 76.36 RUBUTSTN=MCX but had gained 0.1% to trade at 90.23 versus the euro EURRUBTN=MCX.

The two main factors affecting Russian markets were COVID-19 and political squabbling in the United States, said BCS Global Markets Chief Economist Vladimir Tikhomirov.

"It is easy to assume that the majority of investors will continue to sit on the fence as there is very little time left until the U.S. election," he said.

The prospect of a Biden victory has also weighed on the rouble, as investors anticipate greater friction between Washington and Moscow.

Russia reported a record daily rise in new COVID-19 infections on Monday, as the Kremlin warned the pandemic was beginning to inflict a greater toll outside the capital Moscow.

Geopolitical risks, including political turmoil in neighbouring Belarus and continued fighting in the South Caucasus between Azeri and ethnic Armenian forces, also exerted pressure on the rouble.

Russia's central bank on Friday left its key rate unchanged at 4.25% and promised to increase its daily selling of foreign currency to the equivalent of 9.8 billion roubles ($128.2 million), according to Reuters calculations.

The bank, which reports its foreign currency sales with a two-day lag said it had sold 8.7 billion roubles worth of forex last Thursday.

"We think additional FX sales are supportive for the rouble, flow-wise, although only marginally, as overall FX sales would only grow 13% starting from today," said VTB Capital analysts in a note.

Russian stock indexes were down, reflecting a 2.3% fall in the price of Brent crude oil to $40.81 per barrel LCOc1.

The dollar-denominated RTS index .IRTS was down 0.7% to 1,155.6 points. The rouble-based MOEX Russian index .IMOEX was 0.6% lower at 2,801.1 points.

For Russian equities guide see RU/EQUITY

For Russian treasury bonds see 0#RUTSY=MM

($1 = 76.4200 roubles)

(Reporting by Alexander Marrow, additional reporting by Elena Fabrichnaya; Editing by Kirsten Donovan and Ramakrishnan M.)

((alexander.marrow@thomsonreuters.com; +7 495 775 1242;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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