August 15, 2019 / 12:07 PM / 2 months ago

UPDATE 1-Rouble drops to 66.5 vs dollar, lowest since May

(Adds details, updates prices)

MOSCOW, Aug 15 (Reuters) - The rouble fell on Thursday to its lowest level against the dollar since early May on domestic demand for hard currency in Russia and amid concerns over a global economic slowdown.

At 1050 GMT, the rouble was 0.7% weaker against the dollar at 66.49, its lowest level since May 3.

The rouble also lost 0.8% versus the euro, sliding to 74.15 for the first time since April.

“Markets have failed to hold on to fragile optimism from hopes of a de-escalation in trade tensions between the United States and China,” analysts from BCS Premier brokerage said.

The analysts expect the rouble to remain in the range of 65-66.5 against the dollar.

The latest financial market turbulence has been prompted by an inversion in the U.S. Treasury yield curve for the first time in 12 years. The inversion, where two-year yields trade higher than 10-year yields, is considered an early signal of a looming recession.

A steep sell-off in global markets has also been fuelled by weak data from China and Germany which have cemented concerns about the probability of a global economic slowdown.

In Russia, companies looking to make rouble-denominated dividend payments, which tend to be converted quickly into other currencies such as the dollar and the euro, could be stoking demand for foreign currency, a dealer at a major Western bank in Russia said.

Prices for oil, Russia’s main export, deepened losses on Thursday, pressured by mounting recession concerns and a surprise boost in U.S. crude inventories.

Brent crude oil, a global benchmark for Russia’s main export, was down 2.24% at $58.15 a barrel.

The dollar-denominated RTS index fell by 1.2% to 1,244 points, while the rouble-based MOEX Russian index was 0.4% lower at 2,625 points.

For Russian equities guide see

For Russian treasury bonds see (Reporting by Anna Rzhevkina; Additional reporting by Vladimir Abramov; editing by Andrey Ostroukh and James Drummond)

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