Tuesday, 17 November 2015 18:20
MOSCOW: The Russian rouble fell back on Tuesday following a strong rally on Monday, weighed down by concerns about the weak oil price and a potential rise in U.S. interest rates next month.
At 0825 GMT, the rouble was 0.4 percent weaker against the dollar at 65.52 and had lost 0.1 percent to 69.81 versus the euro.
The rouble had risen by 2.5 percent on Monday, taking its cue from a recovery in oil prices and disregarding global risk aversion in the wake of the Paris attacks.
Brent crude oil, a global benchmark for Russia’s main export, was also up 0.4 percent at $ 44.7 a barrel on Tuesday.
However, many analysts regard the oil price rally as likely to be short-lived because of continued oversupply in the market and a strengthening dollar, with negative implications for the rouble.
“In connection with the negative tendencies on the commodity markets the rouble won’t be able to receive full-scale support from the tax period,” Instaforex analyst Igor Kovalev said in a note.
Russian companies will pay major monthly taxes next week, requiring them to convert forex earnings into roubles, a factor that generally supports the rouble.
Russian share indexes continued to rally on Tuesday, following the tendency on global markets which have defied expectations of a sell-off after the Paris attacks.
The dollar-denominated RTS index was up 2.8 percent to 847 points, while the rouble-based MICEX was 1.3 percent higher at 1,763 points.
“Support for the Russian market is also coming from new signs of a thaw in relations with the West,” BCS analyst Mark Bradford said in a note, referring to French President Francois Hollande’s call for an alliance between Russia and the United States against Islamic State.
“All the same investors will follow macro data from the U.S. in the light of a possible increase in Federal Reserve rates in December. Brent oil prices remain under pressure.”
