Russian asset prices fell sharply on Thursday after a state-of-the-nation speech from Russian President Vladimir Putin left investors unimpressed by promised reforms, and oil prices resumed their decline.
By 1430 GMT, the rouble was 1.6 percent weaker on the day at 53.37 versus the dollar and 2 percent weaker at 65.71 against the euro.
The rouble had been up about 1.1 percent against both currencies and dropped after Putin began his speech, repeating his long-standing criticisms of Western policy towards Ukraine and defending Russia’s actions towards its neighbour.
The rouble staged a weak rally when the Russian president began elaborating about pro-business reforms, including an amnesty on capital returning to Russia, a freeze on higher taxes, and an easing of regulations for small businesses.
Putin also called for “harsh” measures against currency speculators, without giving details.
The Russian central bank said later that it was only considering economic measures, not administarive restrictions, against speculators, but that it would request an investigation if its saw signs of market manipulation.
However, by the end of the speech the rouble was in negative territory as markets were unimpressed by what Putin said about the Ukraine crisis and by what he said about economic reforms.
“Net-net, not seeing any new big ideas in this speech which are going to help the Russian economy, or ease market pressure on Russian assets. This is old school, Cold War stuff,” Standard Bank analyst Tim Ash said in a note.
The rouble had seen strong gains in the morning, when the central bank published a statement that reiterated its readiness to intervene in the market to defend the currency, and cut its interest rate on foreign currency repo loans designed to address forex shortages.
The bank has resumed interventions this week, with $700 million in forex sales on Monday. Traders said the bank had intervened by a similar amount on Wednesday. The bank releases data on interventions with a two-day delay.
Analysts and traders expressed scepticism over the impact of the central bank support measures, given heavy demand for foreign currency to repay debt of more than $30 billion this month.
“The modest volume of interventions by the regulator is for now insufficient given the risk of (price) declines on the oil market and the lack of internal supporting factors for the rouble,” Zenit Bank economist Vladimir Evstifeev said in a note.
Russian stock indexes also shed gains during Putin’s speech, and declined further still in later trading as global oil benchmark Brent headed back below $70 a barrel.
By 1430 GMT the dollar-based RTS index was down 2.1 percent to 929 points, while the rouble-based MICEX index was down 0.8 percent at 1,594 points.
The RTS had been up 2 percent on the day, and MICEX up 0.7 percent, when Putin’s speech began.