Russian rouble strengthens despite oil price pressure

MOSCOW (Reuters): The Russian rouble strengthened on Wednesday, pulling further away from one-year lows hit at the end of April even as global oil prices were under pressure.

The rouble was up 0.9% against the U.S. dollar to 77.51 by 0720 GMT and had advanced more than 1.3% versus the euro to 85.08. Against the Chinese yuan – which has become an increasingly important currency pair for the Russian economy over the last year – the rouble was trading up 0.6% at 11.17 in Moscow.

Brent crude oil, a global benchmark for Russia’s main export, was down 0.6% at $76.98 a barrel. Russia relies on its multi-billion dollar energy exports to fund government spending, which has surged as the Kremlin funds its protracted military campaign in Ukraine.

Oil prices recovered from last week’s lows of around $72 a barrel, which is providing some support to the rouble, but Brent came under fresh pressure on Wednesday from global economic concerns.

Analysts at Commerzbank said they expect the rouble to weaken over the medium-term as Moscow’s energy revenues continue to fall.

“Due to the sanctions, the rouble exchange rate now only reflects current account flows. Hence, the rouble is likely to depreciate medium-term due to the declining current account surplus,” Commerzbank FX analyst Tatha Ghose said.

Russian stock indexes were mixed, with blue-chip lender Sberbank holding the market back with a 7% slump after its shares started trading ex-dividend.

The dollar-denominated RTS index was up 0.8% to 1,027.1 points, while the rouble-based MOEX Russian index was 0.1% lower at 2,524.8 points.