Russian rouble shrugs off central bank rate decision to hold rates

MOSCOW (Reuters) - The Russian rouble eased on Friday under pressure from lower oil prices, having largely ignored the central bank’s decision to keep rates unchanged.

The central bank held its key rate at 7.5 percent and said it would study whether rate rises are needed to address risks to its inflation target and to financial stability.

“The non-event decision looks neutral for the rouble and OFZ bonds (government bonds), so external factors will likely remain key source of volatility in the near-term,” said Dmitry Polevoy, chief economist at Russian Direct Investment Fund.

U.S. sanctions remain the major source of uncertainty for the Russian market, particularly the state debt market, as U.S. policymakers had previously said they were considering imposing sanctions on holdings of new Russian debt.

In an interview with Reuters, U.S. National Security Advisor John Bolton said on Friday that Russian sovereign debt might be affected by sanctions “if it’s involved in a financial transaction that’s associated with a different sanctioned transaction.”

At 1330 GMT, the rouble was 0.37 percent weaker against the dollar at 65.85 after briefly hitting its day low of 65.94 per dollar one hour after the central bank rate decision.

Versus the euro the rouble lost 0.17 percent to trade at 74.74 versus.

The main pressure on the rouble came from lower oil prices that dropped as Saudi Arabia warned of oversupply. [O/R]

Brent crude oil, a global benchmark for Russia’s main export, was down 1.04 percent at $76.08 a barrel.

The Russian currency, however, is supported by local month-end tax payments that will end on Monday.

Exporters usually convert their dollars and euros into roubles to pay these duties.

Tax payments this week required hefty payments so banks sought extra funds from the central bank, an unusual development for the tax payment period, the central bank’s data showed.

Russian stock indexes were down to multi-week lows following a sell-off on the global market.

The dollar-denominated RTS index was down 2.63 percent to 1,090.83 points, its lowest level since Sept.17. The rouble-based MOEX Russian index was 2.21 percent lower at 2,280.06 points, the level last seen on Aug. 28.

Reporting by Polina Nikolskaya; Editing by Andrey Ostroukh and Toby Chopra