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Rouble slips on trade tensions, investors snap up OFZ bonds

Credit: REUTERS/MAXIM SHEMETOV

The Russian rouble slipped on Wednesday as global risk aversion increased on political uncertainty related to a formal impeachment inquiry against U.S. President Donald Trump and lingering U.S.-China trade tensions.

Adds OFZ bond auction details, updates prices

MOSCOW, Sept 25 (Reuters) - The Russian rouble slipped on Wednesday as global risk aversion increased on political uncertainty related to a formal impeachment inquiry against U.S. President Donald Trump and lingering U.S.-China trade tensions.

The United States announced fresh Iran-related sanctions on five Chinese individuals and six entities, damping hopes for a swift resolution to the U.S.-China trade war.

At 1603 GMT, the rouble was 0.4% weaker against the dollar at 64.23 RUBUTSTN=MCX after earlier falling to a one-week low of 64.49.

The dollar rebounded as investors were drawn to safe-havens a day after the launch of a formal impeachment inquiry against U.S. President Donald Trump.

Versus the euro, the rouble gained 0.25% to 70.3 EURRUBTN=MCX, having touched its highest level since March at 69.92 on Tuesday.

The rouble's losses were limited by demand related to weekly auctions of OFZ treasury bonds by the finance ministry.

Such auctions usually prompt market players to convert foreign currency to buy the country's sovereign debt. Foreign investors hold around 30% of all OFZ bonds issued by the Russian finance ministry.

On Wednesday, demand for the paper was boosted by the ministry setting no limit for the size of the bond placement for the first time since early June.

Demand for two OFZ bonds auctioned on Wednesday -- maturing in 2022 and 2025 -- was nearly 251 billion roubles ($3.90 billion), almost eight times the amount of bonds sold.

"Market participants that placed large bids counted on a premium," said Arnak Grigoryan, an analyst at the Russian branch of Citibank. However, contrary to expectations, the ministry provided little premium to market prices.

Russian stock indexes were mixed.

The dollar-denominated RTS index .IRTS was down 0.4% to 1,354 points. The rouble-based MOEX Russian index .IMOEX was 0.2% higher at 2,760 points.

For Russian equities guide see RU/EQUITY

For Russian treasury bonds see 0#RUTSY=MM

(Reporting by Vladimir Abramov, Writing by Anna Rzhevkina and Polina Devitt; Editing by Andrey Ostroukh and Kirsten Donovan)

((anna.rzhevkina@tr.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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