Rouble slips past 73 vs dollar; Rusal shares drop in jittery trade

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MOSCOW — The Russian rouble weakened past 73 to the dollar on Monday, heading away from the previous session’s two-month peak in thin trade with U.S. markets closed for a public holiday, while shares in aluminum giant Rusal fell in jittery trade.

The market weighed expectations of another increase in Russian interest rates and a decline in oil prices.

At 1529 GMT the rouble was 0.4% weaker against the dollar at 73.04 after reaching its strongest since late June at 72.55 on Friday.

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Against the euro, the rouble eased 0.3% to 86.64.

The rouble could gain support from Russia’s central bank if it raises rates on Friday for the fifth time this year in an effort to rein in consumer inflation.

A Reuters poll suggested the bank would raise by 50 basis points to 7%, but many analysts predicted a smaller 25-basis-point hike.

Higher rates increase the appeal of rouble-denominated instruments, while expectations that the rate-raising cycle could be close to an end could lead to higher demand for Russian bonds.

In the near-term, the target range for the rouble is 72.5 to 73.1 versus the dollar, Sberbank Asset Management said in a note.

Russia’s decision to trim foreign exchange purchases for state reserves in September could provide some support for the rouble, said Alor Broker analyst Alexey Antonov.

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Brent crude oil, a global benchmark for Russia’s main export, was down 0.6% at $72.15 a barrel, extending losses after Saudi Arabia, the world’s top oil exporter, cut crude contract prices for Asia over the weekend.

The dollar-denominated RTS index was up 0.05% at 1,735.1 while the rouble-based MOEX Russian index gained 0.5% to 4,023.13 after hitting an all-time high of 4,026.03

Rusal shares fell 2% following sharp gains after a coup in major bauxite supplier Guinea sent aluminum prices to their highest in more than 10 years.

Rusal, which is the world’s third-largest aluminum producer, said it aimed to keep its three major bauxite mines and one alumina refinery in Guinea operating after the military coup. Guinea’s bauxite industry – with its mines – accounts for 42% of Rusal’s total bauxite capacity.

(Reporting by Andrey Ostroukh and Anna Rzhevkina; Editing by Sherry Jacob-Phillips, David Goodman and Dan Grebler)