By Jake Cordell
(Reuters) -The Russian rouble hit its weakest level against the U.S. dollar in more than five months on Thursday before paring losses as the West’s price cap on Russia’s oil exports increased selling pressure.
The rouble fell to 64.95 against the U.S. dollar in early trade in Moscow for its lowest reading since July 6. It later recouped some ground to trade down 0.8% for the session at 64.53 by 1300 GMT.
Against the euro, the rouble hit an 11-week low before recovering slightly, down 0.6% at 68.73, while the currency was 0.9% lower against the Chinese yuan at 9.25.
After crashing to all-time lows when Moscow sent tens of thousands of troops into Ukraine on Feb. 24 and the West imposed sanctions on Russia, strict capital controls have helped the rouble to rebound.
At a televised meeting with government officials on Thursday, President Vladimir Putin vowed Russian had defied Western attempts to destroy its economy and hailed the currency’s performance.
“After a serious surge in March and April, price levels in Russia have hardly changed since May, and the Russian rouble has become one of the world’s strongest currencies this year,” he said.
However, fears of a global recession combined with the European Union’s embargo on Russian oil exports and a Western price cap that took effect early this month have increased the pressure on the Russian currency.
Analysts said a fall in foreign currency earnings by Russian exporters – who are required to convert at least half of their foreign earnings into roubles – was pushing the rouble down.
Russian stock indexes were down sharply on Thursday.
The dollar-denominated RTS index lost 2.2% to stand at 1,037.8 points, while the rouble-based MOEX Russian index was also down 1.7% at 2,123.4 points.
A central bank meeting on Friday is also in focus. The regulator is expected to hold interest rates at 7.5% in its final rate-setting decision of the year.
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(Reporting by Jake Cordell; Additional reporting by Elena Fabrichnaya; Editing by David Goodman, Arun Koyyur and Barbara Lewis)
