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Russian Rouble Claws Back Ground Lost after U.S. Sanctions

MOSCOW, April 16 (Reuters) - The rouble strengthened past 76 versus the dollar on Friday, clawing back losses sustained in the previous session when the United States announced fresh sanctions against Moscow, including curbs to Russia’s sovereign debt.

By 1147 GMT, the rouble was 0.5% stronger against the dollar at 75.93, earlier gaining over 1% to reach a more than two-week high of 75.3150.

It had gained 0.4% to trade at 91.04 versus the euro , pulling well clear of the more than five-month low hit on Thursday.

The United States on Thursday imposed an array of sanctions on Russia to punish it for interfering in last year’s U.S. election, cyber hacking, bullying Ukraine and other alleged malign actions. Russia denies all the allegations.

The Kremlin said on Friday that Russian President Vladimir Putin would decide what counter sanctions to impose on Washington.

The sanctions prohibit U.S. financial institutions from participating in the primary market of Russia’s government debt, OFZ treasury bonds, from June 14, but analysts said the measures did not force non-resident holders to urgently sell securities.

“The level of sanctions needed to impair the Russian economic outlook would include an extension of the sanctions to the secondary OFZ market, introducing caps on dollar financing for Russian banks and a potential freeze of Nord Stream 2 project,” said Nikolay Markov, senior economist at Pictet Asset Management.

“At this stage, it seems there is no willingness for further sanctions escalation in that direction.”

Clarity on the sanctions question was also helping the rouble, said Vladimir Tikhomirov, chief economist at BCS Global Markets.

“In the mid-term perspective of one to three weeks, I would expect the rouble to even strengthen to 73-75 versus the dollar,” he said.

Russia’s 10-year benchmark OFZ bonds were at their most expensive in almost a month. Their yields, which move inversely to their price, dropped to 7.00%, down from a high of 7.37% reached on Thursday.

The geopolitical premium paid for the rouble appears significant. In early 2020, when oil prices, one of the main drivers of the rouble’s exchange rate, were last near current levels of around $67 a barrel, the rouble stood at about 61 to the dollar.

Brent crude oil, a global benchmark for Russia’s main export, was up 0.1% at $67.00 a barrel, supporting Russian stock indexes.

The dollar-denominated RTS index was up 1.1% to 1,490.5. The rouble-based MOEX Russian index was 0.7% higher at 3,593.2.

(Additional reporting by Elena Fabrichnaya in Moscow and Tom Arnold in London; Editing by Subhranshu Sahu and Alison Williams)

Source: Reuters

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