Russian rouble weakens with Ukraine tensions, sanctions threats in focus

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MOSCOW, Jan 26 (Reuters) - The Russian rouble weakened back past 79 versus the dollar on Wednesday after showing tentative signs of recovery in the previous session, with Ukraine tensions firmly in focus and the threat of sanctions hanging over Moscow.

At 0735 GMT, the rouble was 0.5% weaker against the dollar at 79.02. It hit a more than 14-month low on Monday.

The rouble had lost 0.5% to trade at 89.21 versus the euro .

Volatility has plagued Russian markets in recent weeks amid Western fears Russia is poised to invade its neighbour, something Moscow has repeatedly denied. The West has threatened sanctions https://www.reuters.com/markets/europe/how-financial-western-sanctions-might-target-russia-2022-01-19 with profound economic effects if Russia does make an incursion.

U.S. President Joe Biden said on Tuesday he would consider personal sanctions on President Vladimir Putin if Russia invades Ukraine, but some big companies and business groups are pushing the White House and lawmakers to be cautious.

"Geopolitical swings still remain a bet on a binary outcome – the tanks roll across the Ukrainian border or they do not; if they do not, there will be swift upside, if they do, there will be dramatic downside," BCS Global Markets said in a note.

Citing persistent volatility, the finance ministry cancelled weekly OFZ treasury bond auctions, usually held on Wednesdays. Russia's 10-year OFZ yields hit their highest since early 2016 at 9.86% on Wednesday. Yields move inversely to price.

Brent crude oil, a global benchmark for Russia's main export, was up 0.2% at $88.33 a barrel, giving Russian stock indexes, still attempting to recover from a massive sell-off on Monday, some support.

The dollar-denominated RTS index was up 1.5% to 1,316.1 points. The rouble-based MOEX Russian index was 1.3% higher at 3,302.6 points.

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(Reporting by Alexander Marrow; Editing by Andrew Heavens)