August 22, 2018 / 8:07 AM / 2 months ago

Rouble hit by threat of more sanctions, FX buying by c.bank

MOSCOW, Aug 22 (Reuters) - The rouble weakened in early trade on Wednesday, pricing in risks of more U.S. sanctions as well as renewed purchases of foreign currency by the Russian central bank at home.

U.S. lawmakers pushed for more aggressive steps to counteract the Russian “menace” on Tuesday despite Donald Trump’s administration insisting current sanctions were already having an effect and vowing to impose more economic pain if Moscow does not change its behaviour.

The U.S. Treasury imposed sanctions on various Russian entities on Tuesday and a new tranche of sanctions announced by the U.S. State Department earlier this month was expected to take effect later on Wednesday, a move likely to further dampen sentiment.

The rouble lost 0.5 percent of its value against the dollar as of 0733 GMT, hovering at 67.65 versus the greenback and heading towards its weakest level since April 2016 of 68.66 it touched earlier this month.

The rouble remained vulnerable to risk aversion and volatility, fuelled by threats of further U.S. sanctions and jitters in other emerging markets.

“The sanctions theme remains in focus for Russian market players,” said Rosbank, a subsidiary of Societe Generale.

Contemplating the falling rouble and a sell-off in the government bonds market, the finance ministry decided to put weekly auctions of treasury bonds on hold for the first time since April.

But the finance ministry resumed buying dollars for state reserves and that put extra pressure on the already battered rouble. The central bank, on behalf of the finance ministry, bought $523 million in two days after putting daily purchases on hold for six consecutive days.

Against the euro, the rouble weakened 0.5 percent to 78.22 , a level last seen on April 11 amid the previous round of market volatility driven by U.S. sanctions.

Russian stocks were mixed. The dollar-denominated RTS index was down 0.3 percent to 1,068.7 points, while the rouble-based MOEX Russian index was 0.1 percent higher at 2,294.5 points.

For Russian equities guide see

For Russian treasury bonds see

$1 = 66.9725 roubles Reporting by Andrey Ostroukh, editing by Louise Heavens

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