(MENAFN- The Peninsula) The rouble recovered yesterday, paring heavy losses as investors anticipated possible action by the central bank to halt a slide that could destabilise Russia's financial system.
With the rouble appearing to be in free-fall in morning trade, some analysts said the country was already in the grip of a currency crisis.
It fell over three percent against both the dollar and the euro following similar falls on Thursday, but talk of an emergency central bank meeting saw it recoup its losses in the afternoon.
The central bank said late on Friday it was willing to increase its forex interventions to defend the rouble "at any moment" and to deploy other instruments in its policy arsenal to support the currency.
The bank said that while several fundamental factors had driven the rouble lower in recent months, it didn't regard a further fall in the rouble as necessary to achieve balance of payments equilibrium.
Prior to the central bank statement, traders said speculators who had opened long dollar positions were closing them in case the central bank took extraordinary measures to support the currency. Rising prices for Brent crude oil also provided some relief for the rouble.
By 1435 GMT, the rouble was 0.5 percent stronger than the previous close at 46.60 against the dollar. It was up 0.3 percent against the euro and 0.4 percent stronger against a dollar-euro basket.
The rouble barely reacted to the central bank statement, weakening slightly in the minutes after it was published.
"People are closing long positions, fearing the central bank could do something over the weekend," said Dmitry Deev, a currency trader at Credit Suisse in Moscow. "The danger of additional central bank interventions hangs over the market. The market fears some kind of non-traditional measures, especially given the fact that people have already started besieging currency exchange booths."
On Wednesday, the central bank altered its interventions policy to limit its support for the rouble by cutting the size of its interventions to $350 million a day. The bank reserved the option of carrying out ad hoc currency interventions in order to preserve financial stability, however.
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