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Tuesday, November 21, 2017

Russian Assets Sink on Oil price Collapse

November 29, 2014

 

Russia's rouble and shares hit new lows on Friday as oil prices collapsed after OPEC decided to leave its output unchanged despite heavy oversupply.

At 1000 GMT, the rouble was around 2.2 percent below the previous close at 49.72 roubles per dollar, and 1.7 percent weaker against the euro at 61.94 roubles .

It earlier hit an all-time low of 49.90 to the dollar. Traders said market moves were exacerbated by thin volumes, which mean that even small purchases of foreign currency were able to move the market.

Brent crude was last trading at around $72 a barrel after falling as much as $6.50 a barrel a day earlier, when the OPEC oil producer group made known its decision not to cut its output targets.

"Yesterday's rouble drop has more legs amid a negative outlook on crude," Maxim Korovin, a forex analyst at VTB Capital bank in Moscow, said in a note.

Oil and gas account for around two-thirds of Russian exports, making the rouble and other Russian assets sensitive to changes in the oil price.

A senior Finance Ministry official said late on Thursday that Russia's budget policy should be adapted to low oil prices, saying he saw a scenario of $80 per barrel in the coming years as moderately optimistic.

Such an oil price fall would necessitate major changes to Russia's recently adopted budget, which envisages an average oil price of around $100 a barrel.

Russia's central bank let the rouble float this month after spending over $70 billion defending the currency this year. But it has warned it could still carry out ad hoc interventions to defend the rouble if needed.

The rouble is down over 30 percent against the dollar since the start of the year, making it one of the worst-performing emerging-market currencies.

The currency's slide has had a strong impact on Russian shares. On Friday, the dollar-denominated RTS index was 3.4 percent lower at 972 points, after earlier hitting a five-year low of 969 points, while the rouble-denominated MICEX index edged up 0.1 percent to 1,533 points.

Domestic-focused stocks performed poorly, while some Russian commodities exporters were lifted by the weaker currency, since it boosts the rouble value of their export earnings.

Top bank Sberbank fell 1.3 percent, while Norilsk Nickel rose over 2 percent. Top oil producer Rosneft was down 1 percent.

For rouble poll data see

For Russian equities guide see

For Russian treasury bonds see

Russia in graphics: http://link.reuters.com/dun63s

(Reporting by Alexander Winning and Vladimir Abramov; Editing by Jason Bush and Ralph Boulton)

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