August 17, 2018 / 11:14 AM / a year ago

Russian ruble weakens again on emerging market jitters

MOSCOW (Reuters) - The Russian ruble fell on Friday, despite rising oil prices, after emerging market currencies were dragged lower by the Turkish lira which slid more than 6 percent against the dollar.

FILE PHOTO: A cashier holds new 200 rouble banknotes in a bank in Moscow, Russia November 21, 2017. REUTERS/Maxim Shemetov

The Turkish currency fell after Washington warned Ankara it should expect more economic sanctions.

The ruble has also taken a hit from the threat of more U.S. sanctions, including restrictions on holding Russian government bonds, prompting the central bank to put its daily buying of foreign currency on hold for the first time since April.

As of 1022 GMT, the ruble was down 0.83 percent to 67.39 to the dollar RUBUTSTN=MCX, heading towards Monday’s low of 68.66. The ruble weakened 0.94 percent to trade at 76.69 against the euro EURRUBTN=MCX.

Yields on 10-year OFZ bonds RU10YT=RR, which move inversely to bond prices, rose to 8.64 percent, their highest since December 2016.

“Russian assets will probably suffer from pressure of varying intensity in the near future until tensions regarding the situation in Turkey and the possible introduction of new sanctions fade,” Veles Capital brokerage said in a note.

Russia’s Analytical Credit Ratings Agency (ACRA) has said Moscow will face higher borrowing costs if the United States bans investors buying new Russian government bonds.

Kremlin spokesman Dmitry Peskov said on Friday there was a “certain volatility” in the market but that Russia’s economic and financial systems were stable.

Fitch Ratings is set to publish a decision on Russia’s sovereign ratings after Friday’s market close.

“Rating agencies usually act on the basis of what has already happened. Potential sanctions on Russia’s sovereign debt are not a fact yet but a risk,” said Evgeny Khilinsky, head of market research at Gazprombank.

“They (the sanctions) have been the subject of speculation for a year, since the U.S. president signed the CAATSA law on Aug. 2 2017, and that did not prevent (Fitch) assigning Russia a positive outlook in September 2017.”

Brent crude futures LCOc1, a global benchmark for Russia’s main export, were up 0.87 percent at $72.04 per barrel, having little impact on Russian markets.

Shares in Rusal were up 1.6 percent in thin trade on the Moscow Exchange (RUAL.MM) after the sanctions-hit aluminum giant said its board had approved moving its domicile to Russia from the British offshore dependency of Jersey.

The ruble-based MOEX Russian index .IMOEX was 0.3 percent lower at 2,254.41 points, while its dollar-denominated peer, the RTS .IRTS, was down 1.0 percent at 1,056.01 points.

Reporting by Andrey Ostroukh and Polina Nikolskaya; Editing by Robin Pomeroy

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