- Rouble recovering after sharpest drop in 15 months
- East-West tensions reduce appetite for Russian assets
- Currency plunged more than 2% to 76.62 vs dollar on Thursday
- Rouble hit close to six-month low vs euro in previous session
MOSCOW, Jan 14 (Reuters) - The Russian rouble firmed on Friday, recovering some ground after a massive sell-off in the Russian market on fears over an escalation of geopolitical tensions between Moscow and the West.
By 0755 GMT the rouble was 0.6% stronger against the dollar at 75.79 after losing more than 2% of its value in the previous session.
Against the euro, the rouble gained 0.5% to 86.90 after sliding from about 85.23 on Thursday to its weakest in almost six months.
The rouble retains fundamental support from a strong current account surplus and high interest rates at home, but adverse geopolitical factors are the more dominant driver.
On Thursday the rouble suffered its biggest drop in 15 months and government bonds tumbled to their lowest in more than three years after Russia said Washington's rejection of Moscow's key security demands was leading talks into a dead end.
Analysts said the market was also reacting to a television interview in which Deputy Foreign Minister Sergei Ryabkov neither confirmed nor ruled out the possibility that Russia might deploy "military infrastructure" in Cuba and Venezuela.
"The spectre of a Caribbean crisis has weakened the rouble," Russian brokerage Alor Broker said.
The rouble has been under pressure since October as Western countries have expressed concerns about Russia's military build-up near Ukraine. Moscow has said it can move its troops within its own territory as it deems necessary.
"The apparent breakdown of Russia-West talks and the 'loud' headlines that ensued naturally mean foreign investors will be hedging their bets vis-a-vis Russia," BCS Global Markets said in a note.
The central bank did not reply to a Reuters request to comment on the rouble's drop, which raises risks of higher inflation because it makes imports more expensive and dents living standards.
Central bank Governor Elvira Nabiullina and Finance Minister Anton Siluanov are due to speak at an economic conference at 0800 GMT and could shed some light on the official view on the rouble's sharp decline.
Russian stock indexes were recovering.
The dollar-denominated RTS index, which slid to a more than eight-month low on Thursday, was up 0.9% at 1,529.9 points. The rouble-based MOEX Russian index was up 0.2% at 3,680.8 points.
Reporting by Andrey Ostroukh and Alexander Marrow Editing by Sherry Jacob-Phillips and David Goodman
Source: Reuters