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Russian rouble firms towards 60 vs dollar, stocks up

Economy Aug 29, 2022 09:37AM ET
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© Reuters. FILE PHOTO: A mock-up of the newly designed Russian 100-rouble banknote is on display during a presentation in Moscow, Russia June 30, 2022. REUTERS/Evgenia Novozhenina

MOSCOW (Reuters) -The rouble firmed towards 60 against the dollar on Monday, supported by the last month-end tax payments that boost demand for the Russian currency, while stocks clipped a two-month high.

At 1317 GMT, the Russian currency gained 0.5% to 60.19 against the dollar. After a wild swing at the market open, the rouble was up 0.8% to trade at 60.17 versus the euro.

The rouble spent most of August near the 60 mark to the dollar as its volatility has subsided after it hit a record low of 121.53 to the dollar in Moscow trade in March, soon after Russia sent tens of thousands of troops into Ukraine. It then rallied to its strongest in seven years of 50.01 in June.

Analysts at Promsvyazbank said the rouble was expected to ease towards 61 to the greenback amid repair works at the Nord Stream 1 gas pipeline from Russia to Europe.

Russia has cut flows through Nord Stream 1 to just 20% of capacity and plans to shut it down entirely for three days next week, citing maintenance issues with turbines. The European Union accuses it of using gas as a weapon to fight back against Western sanctions over Ukraine.

"Remarkably, the national currency does not react much to a complete suspension of Nord Stream 1 - apparently the current account surplus is so large that even this event is incapable of having any significant impact on the situation," said Alexander Dzhioyev, an analyst at Alfa Capital.

Russia's current account surplus - the difference in value between exports and imports - more than tripled year-on-year in the first seven months of 2022, to a record $166.6 billion, as revenues soared while sanctions caused imports to plunge.

So far this year, the rouble has been the world's best-performing currency https://emea1.apps.cp.thomsonreuters.com/Apps/NewsServices/mediaProxy?apiKey=6d416f26-7b24-4f31-beb6-1b5aa0f3fafb&url=http%3A%2F%2Ffingfx.thomsonreuters.com%2Fgfx%2Frngs%2FGLOBAL-CURRENCIES-PERFORMANCE%2F0100301V041%2Findex.html, buoyed by emergency capital controls rolled out by the central bank in a bid to halt a mass sell-off. This helped to avoid economic meltdown that many critics had predicted.

First Deputy Prime Minister Andrei Belousov said on Monday that economic contraction this year will be slightly more than 2% compared to earlier government predictions that it could shrink by more than 12%.

Volatility in the rouble may soon increase again. Moscow Exchange will stop accepting dollars as collateral to underwrite transactions from today and intends to restart early morning trading in September. The central bank has also eased FX restrictions for banks.

Russian stock indexes were climbing.

The rouble-based MOEX Russian index was 0.9% higher at 2,288.4 points, its highest point since June 30. The dollar-denominated RTS index was up 1.2% to 1,197.0 points.

Russian rouble firms towards 60 vs dollar, stocks up
 

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