Ruble companies and Russian stocks cut losses after US-Russia talks

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MOSCOW, Jan 21 (Reuters) – The ruble edged higher on Friday, easing from 77 against the dollar, as Russian stocks pared losses following high-level talks between Moscow and Washington to discuss rising tensions around Ukraine.

Russian Foreign Minister Sergei Lavrov and US Secretary of State Antony Blinken met in Geneva amid fears in the West that Russia might invade its neighbour. Russia denies planning an attack, but says it could take unspecified military action if a list of demands are not met, including a NATO pledge never to admit Ukraine. Read more

As of 13:15 GMT, the ruble was up 0.2% against the dollar at 76.54. It strengthened to 0.5% after both sides agreed dialogue should continue, with Blinken describing Friday’s discussion as frank and helpful.

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Geopolitics has made volatility a defining feature of Russian markets over the past fortnight. On Friday, the ruble came within a hair of 77 to the dollar at the start of the session and also close to its lowest since April.

The ruble is likely to stay between 76 and 77 against the greenback on Friday, said Dmitry Polevoy, chief investment officer at Locko Invest, with a medium-term range of 74-78.

The currency was down 0.2% to trade at 86.87 against the euro.

BCS Global Markets said all eyes were on the Lavrov-Blinken meeting, with tensions at their highest level in years.

Russian assets could come under further pressure if new sanctions are imposed, which Western powers have threatened if Moscow engages in hostilities against Ukraine, but Russian officials say the country’s finances are sound and the economic fundamentals are solid. Read more

Moscow is also grappling with an increase in COVID-19 cases, which hit a record Friday of 49,513 as the Omicron variant spread across the country. Read more

Russia’s 10-year OFZ bond yields were flat at 9.34%, after a session high of 9.42% and moving away from their highest since the start of 2016 of 9.52%, reached earlier this week. Yields move inversely to prices.

Brent crude oil, a global benchmark for Russia’s main export, fell 1.5% to $87.08 a barrel, adding pressure to Russian stock indexes, although they pared some earlier losses .

The dollar-denominated RTS index (.IRTS) fell 1.3% to 1,431.3 points. Russia’s ruble-based MOEX index (.IMOEX) was down 1.1% at 3,477.1 points.

Shares of retailer OR Group (ORUP.MM) fell more than 20% after it failed to repay bonds for 592 million rubles ($7.71 million).

($1 = 76.7480 rubles)

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Reporting by Alexander Marrow Editing by Christian Schmollinger and Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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