Russian rouble loses 3.4% vs US dollar after central bank withdraws support

MOSCOW, Dec 27 (Reuters) - The Russian rouble weakened sharply against the U.S. dollar on Friday after the central bank announced it would withdraw some support for the currency in the first working week of 2025 after the New Year break.

The rouble was down 3.4% at 100.50 against the dollar by 1130 GMT, over-the-counter market data showed. The Russian currency weakened 0.28% to 13.37 against China's yuan in trading on the Moscow Stock Exchange (MOEX).

"The rouble/dollar exchange rate could have been influenced by the closing of some specific positions in currency instruments. Most likely, the current dynamics of the dollar are temporary," T-Bank's analyst Sofya Donets said.

Analysts said the over-the-counter market, where dollars and euros are traded in Russia, remained volatile, adding that the exchange-traded yuan was not showing the same dynamics.

The central bank said it would reduce its net forex sales by almost 60% from Jan. 9 under its complex scheme of foreign currency operations, both to ensure supply on the domestic market and to act on behalf of the finance ministry.

After the rouble tumbled to its lowest level in around 2-1/2 years in November as a result of new U.S. financial sanctions, the central bank moved in to prop up the rouble by deferring purchases of foreign currency on behalf of the finance ministry.

The rouble regained much of its lost ground since then and stabilised at around 100 to the dollar, the level seen by the market as the new equilibrium for the Russian currency.

In a separate announcement on Friday the central bank said it was adjusting the mechanism of the official exchange rate formation, which will now combine data from the stock exchange and over-the-counter trade as well as using cross-rates.

MONITORING CHANGES

Trade in dollars and euros moved to the over-the-counter market in June 2024 after sanctions were imposed on the Moscow Stock Exchange. China's yuan is still trading on MOEX, becoming the most traded foreign currency in Russia.

"We will continue to monitor changes in the structure of the forex market and, if necessary, will further refine the mechanism for determining the official exchange rate of foreign currencies in relation to the rouble," the regulator said.

The central bank said cross-rates would help it to set the official rate for some currency pairs when no data was available. Analysts said the changes would mostly concern trade in non-Western currencies.

One-day rouble/dollar futures, which trade on the MOEX and are a guide for the over-the-counter exchange rate, were up 0.4% at 101.42. The Russian central bank set an official exchange rate at 99.23 to the dollar. (Reporting by Gleb Bryanski Editing by Tomasz Janowski and Gareth Jones)