Russian rouble hits 14-month low against Dollar

The rouble fell to a more than 14 month low against the dollar after a massive sell-off in the previous session, with Russian assets highly sensitive to tensions between Moscow and the West over Ukraine.

Volatility has plagued Russian markets in recent weeks due to Western fears that Russia is poised to invade its neighbour, something Moscow has denied repeatedly. The West has threatened sanctions with huge economic effects if Russia does make an incursion.

NATO said on Monday it was putting troops on standby and reinforcing eastern Europe with more ships and fighter jets, in a move that Russia denounced as Western hysteria in response to the build-up of troops on the Ukraine border. The rouble was 0.3% less than the dollar at 79.01 by the time of 1400 GMT. It fell to 79.50 on Monday, the rouble's lowest point since Nov. 3, 2020.

The rouble had gained 0.1% against the euro to close at 89.01, recovering from its weakest since July 2021, hit on Monday.

The scale of yesterday's sell-off is not off the cards, however U.S.-Russian tensions remain as hot as ever and the trend would suggest further weakness ahead, said BCS Global Markets in a note.

Russia's central bank said it would stop foreign currency purchases on Monday before losses resumed. The rouble was probably stopped from falling past 80 against the dollar, said Dmitry Polevoy, head of investment at Locko Invest.

Under a fiscal rule adopted in 2017 to strengthen the National Wealth Fund, Russia buys foreign currency when oil prices are high and sells when prices go below $44 per barrel, shielding the rouble from oil price swings.

Brent crude oil was up 0.7% at $86.87 a barrel, a global benchmark for Russia's main export.

The finance ministry has canceled weekly auctions of OFZ treasury bonds due on Wednesday for a second consecutive week, in an effort to facilitate market stabilisation, citing persistent volatility on financial markets.

Russia's 10 year OFZ bond yields have fallen to 9.70%, down from 9.77% earlier on Tuesday, which was their highest since early 2016. Russian stock indexes recovered after falling to their lowest since late 2020 in the previous session.