London - The rouble inched lower on Wednesday and Russian bond yields touched new five-year highs as Moscow prepared for its first debt auction since October, while a firmer dollar also took a toll on most other emerging currencies.
The rouble reversed some of the previous day's gains to slip 0.3 percent as crude prices fell towards $78 (R860) a barrel and the dollar index rose.
Russian 10-year yields were around 10.4 percent, the highest since December 2009 ahead of an auction of 5 billion roubles' ($106.7 million) worth of two-year treasury bonds.
The last five sales were cancelled.
“It's not a massive test (of investor appetite) it's a small amount and very short duration. The reason they made it short duration is they want the auction to perform,” said Luis Costa, head of CEEMEA debt and equity strategy at Citi.
He said the bonds would likely be snapped up by Russian banks which are always in need of extra collateral.
Of the rouble, Costa said: “The dynamics are changing, we are no longer in the environment of 1-2 percent daily moves. It's difficult to be constructive on the rouble but there seems to be some sort of stabilisation.”
Russian shares were marginally lower overall, but shares of potash producer Uralkali slumped 8 percent, extending losses after the company was forced to suspend work at the key Solikamsk mine due to water inflow.
Broader emerging equities were down slightly but there were some outliers.
Indian shares hit new record highs, led by consumer companies that benefit from falling inflation.
Turkish markets were up 0.7 percent, due to 1.7 percent gains in Garanti Bank after Spain's BBVA said it was in advanced talks over the possible acquisition of a stake.
And the Jakarta bourse hit seven-week highs after an emergency rate rise to curb inflation after the lifting of fuel subsidies.
Currencies however were on the backfoot for the most part versus the dollar as the yen hit a seven-year low.
The Korean won hit a 14-month low to the dollar.
The South African rand likewise eased, with in-line inflation data indicating that the central bank will likely keep interest rates unchanged at 5.75 percent when it meets on Thursday. - Reuters