Russian rouble steadies against dollar, stocks extend slide

The Russian rouble steadied against the dollar on Tuesday as market players gauged the impact of the latest round of Western sanctions against Moscow and investor focus turned to an expected central bank rate cut later in the week.

At 0807 GMT, the rouble was unchanged against the dollar at 61.04, supported by capital controls. It has stabilised in the relatively narrow range of 60.0-62.5 in the past few days after rapid swings in May.

Promsvyazbank analysts said the currency would consolidate in the 60-62 range to the U.S. dollar on Tuesday.

The rouble had gained 0.6% to trade at 64.73 versus the euro.

On the Moscow Exchange, the rouble is driven by capital controls that Russia imposed to protect its financial system soon after sending tens of thousands of troops into Ukraine on Feb. 24.

Sanctions and Russia’s efforts to meet its sovereign debt obligations remain in focus.

European Union countries last week agreed their sixth package of sanctions against Moscow over what it terms its “special military operation” in Ukraine, including an import ban on all Russian seaborne crude oil and petroleum products in six to eight months.

Russia’s National Settlement Depository (NSD), which Moscow had planned to use to service the country’s Eurobonds, will suspend transactions in euros after the EU added the entity to its sanctions list.

The Vedomosti daily reported on Tuesday, citing sources, that investors have not yet received finance ministry payments on Eurobonds due in 2026 and 2036 made before a key U.S. waiver allowing such transactions expired last month.

On the local debt market, yields on 10-year OFZ treasury bonds hit 8.88%, their lowest since Jan. 13 as the market awaited the central bank rate decision due on Friday. Bond yields move inversely to prices.

A majority of analysts polled by Reuters expect a 100-basis-point cut to 10% as the bank tries to make lending more affordable amid sluggish consumer demand and a pause in inflation.

Russian stock indexes were falling.

The dollar-denominated RTS index was down 1.9% to 1,156.5 points. The rouble-based MOEX Russian index was 1.8% lower at 2,240.8 points, reaching its lowest point since May 24.