- Title: RUSSIA-MARKETS/ROUBLE Russian rouble falls further, more losses predicted
- Date: 2nd December 2014
- Summary: COMPUTER SCREEN
- Embargoed: 17th December 2014 12:00
- Topics: General
- Reuters ID: LVABIYHVQE6S5YR38UXW9UAZZWH
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- Story Text: As the Russian rouble gave up early gains on Tuesday (December 2) amid talk of recession, an analyst said the Russian Central Bank is unlikely to prop up the currency as it did earlier in the year to stem the rouble's fall.
At 1300 GMT, the rouble was down 3.9 percent against the dollar at 53.19, after rising as much as 1 percent on the day earlier in the session. It was trading 3.5 percent weaker against the euro at 66.15.
Crude gave up some of its gains from late Monday (December 1) but, at below $72 per barrel of Brent, remained above the multi-year lows reached earlier. That lifted the rouble in early trade after it suffered its biggest intraday losses in 16 years in the previous session.
But the economy ministry said that lower oil prices and sanctions imposed on Moscow over its role in the Ukraine conflict would cause gross domestic product to contract by 0.8 percent next year, a significant change from an earlier forecast of 1.2 percent growth.
The ministry also cut its forecast for 2015's average oil prices by $20 to $80 and said it expected an average rouble rate of 49 to the dollar.
Dmitry Savchenko, a chief analyst at Nordea bank, gave an estimate near the ministry's outlook.
"Most likely the rouble will remain within the limits from 50 to 55 (roubles to the U.S. dollar). If we allow for some optimistic scenario and oil prices recovers to at least 90 dollars per barrel within the coming months, there is high probability that the rouble will cross the mark of 50 against the dollar. And we will see the marks of about 45," he said.
Savchenko said the Russian Central Bank's huge interventions were a thing of the past.
"Now there is an opinion that the central bank is still ready to act on the market. I cannot rule out the possibility that within the past two days the central bank made some interventions on the market in order to stop the abrupt fall of the rouble. But if we talk about the full-scale interventions, it is absolutely clear now, that the Central Bank is not ready to spend the reserves, which means the interventions that we saw in the beginning of the year and in autumn we won't see anymore," he said.
The finance ministry said later it was cancelling its weekly treasury bonds auction, usually held on Wednesday, because of unfavourable market conditions.
The rouble closed its previous session down 1.6 percent, probably supported by interventions from the central bank, traders said. But earlier in the session on Monday, it had traded as much as 7 percent lower against the dollar.
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