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UPDATE 1-Russia rouble holds ground but may trim gains

Published 07/28/2010, 11:34 AM
Updated 07/28/2010, 11:40 AM
EUR/RUB
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* Rouble stays near 10-week high vs dollar

* Market eyes oil, stocks, lacks momentum

* Slight weakening is possible (Adds comments, quotes, updates prices)

MOSCOW, July 28 (Reuters) - The Russian rouble held its ground on Wednesday, hovering near a 10-week peak versus the dollar, but dealers said it might trim recent gains as support from a local tax period waned.

The rouble gave up 6 kopecks against the dollar, or 0.2 percent, to 30.26 -- just below a 10-week high of 30.19 hit in early trade.

Against the euro, the rouble was virtually unchanged at 39.30 .

Oil prices -- the rouble's main benchmark -- bolstered Russian asset values despite falling below $76 a barrel [O/R]. Such price levels are still considered enough to ensure inflows into Russia's economy.

The rouble has been supported for several days by Russian exporters swapping dollar and euro revenues to meet month and quarter-end domestic tax payments.

The last payment of income taxes, due by Wednesday, may have totalled 240-270 billion roubles ($7.9-8.9 billion), according to Trust bank estimates.

"Lower oil prices and some risk aversion may prompt investors to keep away from the rouble. We saw exporters selling (foreign currencies) but not much more than usual," said Andrey Mishko, a dealer at Nomos bank.

Tax payments affected the Russian money market where overnight interbank interest rates were peaking above 3.0 percent compared to around 2.5 percent seen last week.

NO CLEAR MOOD

Against the euro-dollar basket, the rouble was down 5 kopecks at 34.33 , remaining in the zone of the central bank's interventions, which buys some $150 million a day in the range of 33.40-34.40 to ease upward pressure on the rouble, dealers say.

Dealers said the market was eyeing developments in U.S. stocks that might take their toll on oil prices and commodity currencies like the rouble.

"There is no speculative mood, no clear understanding of the further direction. There are no reasons to break through the level of 34.30 (roubles per basket) but if oil climbs to $80, the downside pressure (on the basket) will mount," said Stanislav Yarushevichus, chief dealer at ING bank in Moscow. Analysts at Renaissance Capital said in a note to clients the rouble was likely to stay within its recent trading range of 34.20-34.40 in terms of the basket in coming days. (Reporting by Andrey Ostroukh and Vladimir Abramov; Editing by Andrew Heavens)

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