Economic news

Rouble Leaps to more than 3-Week High near 59 vs Dollar

  • This content was produced in Russia where the law restricts coverage of Russian military operations in Ukraine

MOSCOW, Aug 18 (Reuters) - The rouble surged to more than three-week highs on Thursday against the dollar and euro and Russian stocks edged higher, helped by stronger oil prices and an upcoming tax period that usually boosts rouble demand.

By 1444 GMT, the rouble was 2.4% stronger against the dollar at 59.27, having earlier hit its firmest point since July. 26 of 58.90.

Against the euro, the rouble gained 2.8% to 59.94 , its strongest since late July.

The rouble should continue strengthening on Thursday, SberCIB Investment Research in a note said, pointing to month-end tax payments that usually prompt export-focused companies to convert part of their foreign currency revenue.

"With tax payment deadlines fast approaching, Russian exporters will be ramping up their hard currency sales," SberCIB said.

Propped up by capital controls, the rouble has become the world's best-performing currency this year.

Rouble volatility has subsided after wild swings that saw it hit a record low of 121.53 to the dollar on the Moscow Exchange in March, days after Russia sent tens of thousands of troops into Ukraine on Feb. 24, and then rally to a seven-year peak of 50.01 in June.

On the bond market, yields on two-year OFZ treasury bonds, which move inversely with prices, touched a more than one-week low of 8.90%, before edging back towards Wednesday's close of 9.01% .

Data late on Wednesday showed consumer prices in Russia dipped for the sixth straight week.

"If this trend doesn't reverse in September, we might see a further rate cut at the CBR's next meeting," BCS Global Markets said in a note.

The central bank last cut its key interest rate to 8% in July and said it would study the need for more cuts as inflation slows and an economic contraction continues for longer than previously thought.

Rate cuts boost bond prices and ease upside pressure on the rouble by making deposits less attractive, while supporting the stock market as investors seek more high-yielding assets to park their funds.

The dollar-denominated RTS index was up 2.7% at 1,167.1 points. The rouble-based MOEX Russian index was 0.4% higher at 2,196.1 points.

Brent crude oil , a global benchmark for Russia's main export, was up 2.7% at $96.21 a barrel as robust U.S. fuel consumption data and expected falls in Russian supply later in the year offset concerns that a possible recession in developed economies could undercut demand.

OPEC is keen to ensure Russia remains part of the OPEC+ oil production deal after 2022, OPEC Secretary General Haitham Al Ghais told Reuters on Thursday.

Reporting by Andrey Ostroukh and Alexander Marrow; Editing by Tomasz Janowski, Jan Harvey and Barbara Lewis

Source: Reuters

To leave a comment you must or Join us

More news

Back to economic news list

By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree