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Russian financial market under pressure as oil price slips further

January 13, 2015, 16:32 UTC+3 MOSCOW
The Russian stock indexes showed mixed dynamics on Tuesday
1 pages in this article
© Sergey Savostyanov/TASS

MOSCOW, January 13. /TASS/. Russia’s Central Bank on Tuesday lowered the official ruble/dollar rate for Wednesday by 3.3% to 64.84 and the ruble/euro rate by 3% to 76.77 as the domestic financial market remained under pressure amid negative external economic developments.

The value of the dual currency basket comprising $0.55 and 0.45 euros rose by 3.29% against the ruble to 70.2115.

The Russian stock indexes showed mixed dynamics on Tuesday. The ruble-denominated MICEX stock index was edging up less than 1% to 1,525.94 points while the RTS index was down more than 3% to 731.91.

The Russian stock market showed negative dynamics in the dollar segment and neutral in the ruble sector in the first half of the day, remaining under the pressure of low oil prices and investor fears of Russia’s sovereign rating downgrade by Standard & Poor’s international rating agency already this week.

Foreign investors’ negative sentiments about Russia fueled by fears of the country’s sovereign rating cut to “junk” will certainly affect Russian stock market prices, said Oleg Abelev, head of the analytical department at Ricom Trust brokerage.

“If Standard & Poor’s lowers Russia’s credit rating already at the end of this week, this will cause further active sell-offs,” the expert said.

“The MICEX index has all the chances to sag below 1,500 points but for a short while as the market may be helped by a devaluation wave amid falling oil prices,” he said.

The growth leaders on the stock market in the afternoon trade were the shares of diamond miner Alrosa (up 4.38%), steel maker Severstal (2.47%), Russian depositary receipts of aluminum giant RusAl (2.45%) and the shares of Novolipetsk Steel (2.1%).

World oil prices stayed on the downside trend on Tuesday by mid-afternoon trade in Russia.

The price of Brent futures for February delivery briefly touched $45.23 per barrel, the lowest level since March 2009, before slightly edging up to $45.67 per barrel. Investors are waiting for fresh data on US oil inventories, which may show an increase by 1.75 million barrels over the past week.

Besides, the UAE energy minister said on Monday his country would not give up its plan to boost oil output.

“As it seems to me, we can already talk about the final stage of the current downside movement. Probably, within the next 4-6 weeks, we see an exhaustion of sell-offs and the start of oil price recovery,” Chief Analyst of the Investment Department at VTB-24 Bank Stanislav Kleshchyov said.

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