Russian rouble weakens vs US dollar ahead of Ukraine talks
MOSCOW, June 2 (Reuters) - The Russian rouble fell against the U.S. dollar on Monday ahead of a new round of talks between Russia and Ukraine in Istanbul and following Ukrainian attacks on Russian air bases on Sunday.
By 0920 GMT, the rouble RUB= was down 1.7% at 78.80 per U.S. dollar, LSEG data based on over-the-counter quotes showed. The rouble hit 76.90 to the dollar, its strongest since May 2023, on May 29.
Russia and Ukraine are set to hold their second round of direct peace talks since 2022, but the two sides are still far apart on how to end the war and the fighting has stepped up ahead of the talks.
The markets will also be closely watching the central bank's decision, due on June 6, on its key interest rate, which is currently at 21%, the highest level since the early 2000s. The regulator jacked up borrowing costs to dampen inflation.
"The majority is focused only on the regulator's easing of signals, indicating a possible key rate reduction in upcoming meetings," said Denis Popov from PSB bank.
"Under these conditions, high demand for rouble assets will persist, which will significantly support the rouble's exchange rate, even with a moderately negative geopolitical news backdrop," he added.
Against the Chinese yuan, the rouble was down 0.4% at 10.93 on the Moscow Stock Exchange. Russia's central bank uses yuan for foreign exchange interventions, and it is the most traded foreign currency in Russia.
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