Rouble drops over 2 pct after c.bank loosens grip
By Alexander Winning
MOSCOW, Nov 6 (Reuters) - The rouble fell more than 2 percent against both the dollar and euro on Thursday, a day after the central bank softened its stance on defending the currency, having spent more in October to shore it up than it has in over five years.
At 1310 GMT, the rouble was 2.3 percent weaker against the dollar at 45.98, earlier slipping beyond 46 roubles per dollar for the first time, and lost 2.65 percent to trade at 57.56 versus the euro.
That left the Russian currency 2.48 percent weaker at 51.20 against a dollar-euro basket.
Central bank data on Thursday showed the bank spent over $29 billion defending the rouble in October, the largest monthly intervention since early 2009. But under new rules announced on Wednesday, the bank said it would limit its daily interventions to just $350 million a day, barring threats to financial stability.
"If oil and geopolitical risks remain, we doubt the correct USD/RUB rate should be much lower," Dmitry Polevoy, chief Russia economist at ING Bank in Moscow, said in a note.
"Therefore any interventions to strengthen the rouble without an improvement in external conditions will just provoke another wave of speculation under the slogan 'buy on dips'."
Plunging oil prices and Western sanctions over the Ukraine crisis have shrivelled Russia's exports and investment inflows, driving the rouble lower over several months. European Union leaders have said there is little chance the sanctions will be removed in the near future.
Brent crude oil futures slipped again on Thursday, falling below $83. The benchmark has lost around 25 percent since the start of the year.
Economic data provided a further drag on the Russian currency. Russia's service sector contracted in October at the fastest pace since May, a survey showed, while data showed annual inflation quickened last month to 8.3 percent, well above official targets.
But some analysts say speculative selling pressure is the chief factor driving the rouble lower. "The flight from the Russian currency has become panicky and is practically not linked to fundamental factors," Ivan Kopeikin, a forex analyst at Russian brokerage BCS Express said in a note.
Shares were mixed, with the rouble-denominated MICEX index posting gains for the eighth straight session. Analysts have linked gains in the resource-heavy MICEX to a weaker rouble, which boosts commodity exporters' earnings when calculated in roubles.
At 1310 GMT, the MICEX was up 1.4 percent at 1,516 points after breaking through the 1,500 mark for the first time since July 10. The dollar-denominated RTS index, however, slipped for the third day in a row and was down 1.5 percent at 1,047 points, conversely dragged lower by the slump in the rouble.
For rouble poll data see
For Russian equities guide see
For Russian treasury bonds see
Russia in graphics: http://link.reuters.com/dun63s (Editing by Hugh Lawson)
