March 29, 2019 / 3:45 PM / 3 months ago

UPDATE 1-Russian rouble falls on report of renewed sanctions threat

(Recasts with rouble drop, adds detail)

MOSCOW, March 29 (Reuters) - The Russian rouble fell sharply in late trading on Friday, giving up earlier gains, after a media report raised the possibility of new U.S. sanctions that could touch Russia’s banking sector.

In less than 10 minutes, the rouble dropped to 65.75 versus the dollar, its weakest since March 12, from around 65.10.

The slide coincided with a Bloomberg report that said the United States had prepared new sanctions against Russia over the poisoning of former spy Sergei Skripal and his daughter in the English town of Salisbury in 2018.

“Negative sanctions and geopolitical risks for the rouble have increased due to a new possible round of U.S. sanctions related to the Skripals,” said Vladimir Miklashevsky, senior economist and trading desk strategist at Danske Bank in Helsinki.

Skripal and his daughter Yulia were found slumped unconscious on a bench in Salisbury in March last year after being poisoned with the Novichok military-grade nerve agent.

London accused Moscow of carrying out the poisoning but Russia has repeatedly denied any involvement.

The standoff between Moscow and Washington over Venezuela, as well as a presidential election in Ukraine this Sunday, also put pressure on the rouble, Miklashevsky said.

On Friday, the White House warned Russia — that backs Venezuelan President Nicolas Maduro — against sending troops and military equipment to the country, saying the United States would view such actions as a direct threat to the region’s security.

The latest report on sanctions is a reminder that sanctions risks are here for a long time, said Kirill Tremasov, a former economy ministry official and now head of research at Loko-Invest.

At 1509 GMT, the rouble was 0.8 percent weaker on the day at 65.44 versus the dollar and also down 0.8 percent at 73.48 against the euro.

Russian treasury bonds also dipped on Friday after the sanctions report, while pricing in the finance ministry’s intention to increase state borrowing in the second quarter.

Yields on 10-year OFZ treasury bonds, which move inversely to their prices, rose to 8.38 percent, a level last seen on March 18.

Prices for oil, Russia’s key export, were supportive for Russian assets as Brent crude oil futures rose 0.7 percent to $68.28 per barrel. But the negative newsflow outweighed this development.

The dollar-denominated RTS index was down 0.8 percent at 1,197.9 points, while the rouble-based MOEX inched 0.2 percent lower to 2,488.3 points.

For Russian equities guide see

For Russian treasury bonds see (Reporting by Andrey Ostroukh Additional reporting by Vladimir Abramov, Polina Nikolskaya, Gabrielle Tétrault-Farber and Tom Balmforth Editing by Kirsten Donovan)

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