Russia rouble fails to extend weekly gains, stays stable

By Lidia Kelly MOSCOW, Nov 7 (Reuters) - Russia's rouble failed to extend its weekly gains but remained broadly stable during a week of falling oil prices and shaken optimism in global economic recovery, closing on Friday only slightly weaker than a week earlier. The rouble finished the week at 35.39 against the dollar-euro basket, used for guiding the central bank's nominal exchange rate policy, sliding six kopecks from a week ago and breaking a streak of nine weeks of gains. Oil, Russia's chief export, slipped by more than 2 percent below $80 per barrel on Friday on poor economic data from the United States, dampening investors' enthusiasm. "The current week demonstrates that even in a weaker global environment the rouble is holding pretty well," Nikolai Podguzov, the head of fixed income strategy at Renaissance Capital in Moscow, said. The currency still remains around 8 percent stronger against the basket since its latest rally began in early September. It also has held ground against the dollar, closing Friday at 29.06 per dollar, only slightly off its strongest level this year. The slight weakening of the rouble against the basket this week has gifted the central bank with a respite from interventions aimed at keeping the rouble's rise moderate. Investors have been revisiting en masse emerging markets in search for higher returns in recent months, encouraged by improving data signalling the global economy is out of its doldrums. Russia's rouble has offered a particularly attractive investment, seducing with lucrative returns on carry trade deals. The central bank's benchmark short-term refinancing rate is at 9.50 percent -- significantly higher than the 1 percent or smaller rates among the other G8 economies. Investors' mid-term sentiment towards the rouble also remains upbeat with NDF contracts showing the currency at 30.93 per dollar in 12 months, 12 kopecks stronger than a week ago and more than 10 roubles stronger than at the start of 2009 . "Only a deep, deep correction on global markets could seriously weaken the rouble," said a local Moscow dealer. "There is quite a bit of nervousness among some speculators, but we do not expect any catastrophe." (Reporting and writing by Lidia Kelly; Editing by Andy Bruce) Keywords: RUSSIA/ROUBLE ([e-mail]; [phone]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.