UPDATE 2-Rouble skids to 4-year low after Russia and OPEC fail to reach deal

* Rouble falls to 74.95 vs dollar, 85.74 vs euro

* Oil prices plummet after no deal with OPEC

* Russian companies’ GDRs post double-digit losses in London

* Russian cenbank halts FX buying for reserves

* Falling rouble dents household incomes, business activity (Adds Belarusian rouble, updates figures)

By Andrey Ostroukh

MOSCOW, March 9 (Reuters) – The Russian rouble slumped to its weakest level since early 2016 on Monday following a crash in the oil price after Moscow and OPEC failed to reach an oil output deal, prompting Saudi Arabia to slash its crude export prices.

The rouble had tumbled 7.7% to 74.40 versus the dollar on the interbank market as of 1409 GMT after falling to 74.95, a level last seen in late February 2016. Against the euro, the rouble was at 84.95, its weakest since February 2016.

Russian authorities were quick to respond to the rouble’s fall, with the central bank suspending its daily purchases of foreign currency for state reserves for 30 days, in an attempt to ease downside pressure on the rouble.

On Friday the rouble had ended on the Moscow Exchange at 68.57 against the dollar and 77.51 versus the euro.

Shares in Russian companies also fell sharply in London as the Moscow Stock Exchange was closed on Monday for a public holiday.

Global depositary receipts (GDRs) in oil giant Rosneft slid 21.8%, GDRs of Russia’s No.2 oil producer Lukoil fell 19.4% and gas producer Novatek saw its GDRs drop 14.7%.

Oil prices lost as much as a third of their value on Monday in their biggest daily rout since the 1991 Gulf War as Saudi Arabia and Russia signalled they would hike output in a market already awash with crude after their three-year supply pact collapsed.

Yet another drop in the rouble and oil prices could be sensitive for authorities and Russian President Vladimir Putin, who last week blamed low oil prices on falling household incomes.

The falling rouble usually sparks concerns about inflation as rises in the dollar and euro filter into prices in Russia as imports become more expensive.

Rapid moves in the rouble also suffocate business and investment activity as companies tend to play forex markets instead of focusing on their business.

Russia’s central bank said it stood ready to do more to stabilise markets.

“The Bank of Russia is monitoring the situation on the financial market and is ready to engage additional instruments in order to preserve the financial stability,” it said.

In neighbouring Belarus, the Belarusian rouble fell 5%, tracking the Russian rouble and the fall in oil prices.

Oil prices have been under pressure in the past few weeks and extended losses after Russia balked at making a further steep output cut proposed by OPEC to stabilize oil markets hit by worry over the economic impact of the coronavirus.

Brent crude futures were down 20% at $36.19 a barrel after earlier dropping to $31.02, their lowest since Feb. 12, 2016.

Brent futures were on track for their biggest daily decline since Jan. 17, 1991, at the start of the first Gulf War.

Fitch rating agency said the drop in oil prices towards $30 per barrel poses risks of a rouble devaluation and budget deficit, the RIA state news agency reported.

Russia’s finance ministry said earlier on Monday that the country could weather oil prices of $25 to 30$ per barrel for between six and 10 years, and that it could tap into its National Wealth Fund if low oil prices linger.

For Russian equities guide see

For Russian treasury bonds see (Reporting by Andrey Ostroukh; additional reporting by Andrey Makhovsky in Minsk; Editing by Alex Richardson/Alexander Smith/Susan Fenton)

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