Russian rouble steady despite hawkish Fed minutes

Russia's rouble was recovering from earlier weakness triggered by what analysts labeled a 'hawkish' set of US central bank meeting minutes.

The minutes of the Federal Reserve's rate-setting meeting on 25-26 September, which were released overnight, had revealed that rate-setters in the US by and large believed that short-term interest rates would need to be raised past the so-called 'neutral' level, of around 3.0%, in order to avoid a future rise in inflation past their 2.0% target.

As of 1511 BST, the US dollar was off by 0.10% against the Russian currency on MOEX, at 5.5801, having hit an intraday high of 5.6331 earlier during the same session.

In parallel, the euro was edging up by 0.03% to 75.3788 roubles.

Nevertheless, Daria Isakova, senior economist at SOVA Capital, expected the Russian currency to be supported by forthcoming data on tax payments by Russian exporters, on 25 October, which she expected would outpace September's levels.

Isakova also noted the relative stability of crude oil futures on Thursday, despite the "strong" increase seen in US stockpiles over the prior week, which she said was helping to buoy the currency.

According to figures released on Wednesday by the Energy Information Administration, the US Department of Energy's statistical arm, commercial US crude oil inventories jumped by 6.5m barrels over the week ending on 12 October to reach 416.m.

Uncertainty around the ongoing talks on the UK's withdrawal and Italy's budget were also weighing on the euro, she said.

"In general, the further dynamics of the Russian currency will be determined by investor sentiment on global platforms with respect to risky assets."

Linked to all of the above, among other things the Fed minutes said: "some participants noted that financial stresses in a few [emerging market economies] could pose additional risks if they were to spread more broadly through the global economy and financial markets."

On that note, Ian Shepherdson at Pantheon Macroeconomics said: "the key word here, in our view, is "if"; the EM troubles so far are no threat to the U.S. cycle."