Russian rouble falls back as oil renews retreat
Russia's rouble weakened on Thursday as global oil prices resumed their slide and investors were nervous at the prospect of Russia being downgraded to 'junk' status. At 0840 GMT the rouble was around 1 per cent weaker against the dollar at 65.43 and was also 1 per cent weaker against the euro at 77.08. The rouble often takes its lead from prices for oil, one of Russia's chief exports, and Brent crude fell over 2 per cent on Thursday after strong gains on Wednesday. "Yesterday's dynamics of the domestic currency market show the rouble is exclusively following prices for 'black gold' (oil), while other factors and threats have a secondary importance," analysts at Bank Zenit said in a note. "The Finance Ministry's supportive rhetoric isn't having a noticeable effect on the rouble," the analysts wrote. Finance Minister Anton Siluanov said on Wednesday the ministry planned to convert part of its Reserve Fund into roubles. Also weighing on sentiment, international ratings agency Standard & Poor's is expected to review Russia's sovereign credit ratings in the coming days. S&P currently rates Russia at just one notch above 'junk' status with a negative outlook, and Russia's economy minister has said the likelihood of a downgrade was "pretty high".Besides the hit to a country's image of being rated 'junk,' such a downgrade can push its borrowing costs up. Many mainstream investment and pension funds have rules preventing them from buying anything not classed as investment grade. Russia's central bank said on Thursday it had sold $650 million worth of foreign currency on Jan. 13 on behalf of the Finance Ministry. The central bank replaced its head of monetary policy on Wednesday, amid criticism over its defence of the rouble, which fell more than 40 per cent last year, weighed down by Western sanctions over the Ukraine crisis and a sharp drop in oil prices.
Rupee jumps 46 paise against dollar in early trade
The rupee soared by 46 paise to trade at a fresh one-month high of 61.72 against the dollar in early trade today at the Interbank Foreign Exchange after the RBI cut interest rates by 25 basis points to 7.75 per cent. Forex dealers said besides a higher opening in the domestic equity market and dollar's weakness against other Asian currencies also supported the rupee. The rupee had ended four paise lower at 62.18 on fresh dollar demand from banks and importers in yesterday's trade in view of fall in crude oil prices. Meanwhile, the benchmark BSE Sensex zoomed by 600.77 points, or 2.19 per cent, to 27,947.59 in opening trade today.
Russia's rouble weakened on Thursday as global oil prices resumed their slide and investors were nervous at the prospect of Russia being downgraded to 'junk' status. At 0840 GMT the rouble was around 1 per cent weaker against the dollar at 65.43 and was also 1 per cent weaker against the euro at 77.08. The rouble often takes its lead from prices for oil, one of Russia's chief exports, and Brent crude fell over 2 per cent on Thursday after strong gains on Wednesday. "Yesterday's dynamics of the domestic currency market show the rouble is exclusively following prices for 'black gold' (oil), while other factors and threats have a secondary importance," analysts at Bank Zenit said in a note. "The Finance Ministry's supportive rhetoric isn't having a noticeable effect on the rouble," the analysts wrote. Finance Minister Anton Siluanov said on Wednesday the ministry planned to convert part of its Reserve Fund into roubles. Also weighing on sentiment, international ratings agency Standard & Poor's is expected to review Russia's sovereign credit ratings in the coming days. S&P currently rates Russia at just one notch above 'junk' status with a negative outlook, and Russia's economy minister has said the likelihood of a downgrade was "pretty high".Besides the hit to a country's image of being rated 'junk,' such a downgrade can push its borrowing costs up. Many mainstream investment and pension funds have rules preventing them from buying anything not classed as investment grade. Russia's central bank said on Thursday it had sold $650 million worth of foreign currency on Jan. 13 on behalf of the Finance Ministry. The central bank replaced its head of monetary policy on Wednesday, amid criticism over its defence of the rouble, which fell more than 40 per cent last year, weighed down by Western sanctions over the Ukraine crisis and a sharp drop in oil prices.
The rupee soared by 46 paise to trade at a fresh one-month high of 61.72 against the dollar in early trade today at the Interbank Foreign Exchange after the RBI cut interest rates by 25 basis points to 7.75 per cent. Forex dealers said besides a higher opening in the domestic equity market and dollar's weakness against other Asian currencies also supported the rupee. The rupee had ended four paise lower at 62.18 on fresh dollar demand from banks and importers in yesterday's trade in view of fall in crude oil prices. Meanwhile, the benchmark BSE Sensex zoomed by 600.77 points, or 2.19 per cent, to 27,947.59 in opening trade today.
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