Yen firm as oil slump curbs risk appetite, rouble rebounds sharply

Credit: Reuters/Vasily Fedosenko/Files

A street merchant counts Russian roubles at his shop in Sevastopol in this March 24, 2014 file photo.

The ruble traded at 60.00 to the dollar RUB=EBS after falling to as low as 67.1375 on EBS on Monday.

The Russian currency had tumbled over 50 percent against the dollar over the past half year on plunging oil prices and the West's sanctions linked to the Ukraine crisis. It jumped after the Russian central bank hiked its key interest rate to 17 percent from 10.5 percent.

'This is definitely a step in the right direction. The real interest rate right now is significantly positive, 7 to 8 percent,' said Jorge Mariscal, chief investment officer for emerging markets at UBS Wealth Management in New York.

Still, the fate of the ruble - and of many other commodity currencies - rests on the price of oil, which showed no signs of bottoming out yet.

U.S. crude futures CLc1 fell 3.3 percent on Monday after OPEC once again said it will not cut oil output despite a global supply glut, and a UAE official opposed holding an emergency meeting of the producer group to support prices. [O/R]

'As long as oil prices keep falling, the ruble will stay under pressure. We have to see whether the latest rate hike will turn around the ruble,' said Shin Kadota, chief FX strategist at Barclays in Tokyo.

Plunging oil prices are hurting commodity currencies, with the Canadian dollar sliding to five-year lows and the Australian dollar at 4-1/2-year lows of $0.8201.

The Canadian dollar fell as low as C$1.1655 to the U.S. dollar while the Australian dollar traded at $0.8212.

Investors, fretting that cheap oil prices could make it difficult for some energy producers to survive, are avoiding risk assets and moving into the safe haven yen.

The dollar traded at 117.87 yen JPY=, not far from a last week's low of 117.445.

The currency could test that level if the U.S. Federal Reserve does not indicate that it is likely to raise rates next year after its two-day meeting starting from Tuesday.

The euro was little changed at $1.2445 EUR=.

(Additional reporting by Daniel Bases in New York; Editing by Shri Navaratnam)