Russian rouble hits 2-week high against dollar

THE Russian rouble firmed to a two-week high against the dollar on Tuesday, bolstered by local demand related to tax payments and shrugging off the finance ministry’s plans to resume forex purchases for state coffers.

The rouble is set to see support in the second half of July as export-focused companies usually step up conversion of their forex revenues to meet local liabilities. Tax payments began last week and the bulk are due next week.

At 0722 GMT, the rouble was 0.7 per cent stronger against the dollar at 55.96 after touching 55.82, a level last seen on July 5.

The rouble is expected to trade within the 54-58 range to the greenback in the short term, Sberbank analysts said.

Against the euro, the rouble gained 0.8 per cent to 56.71 , its strongest since July 4.

The rouble has become the world’s best-performing currency so far this year, boosted by measures - including restrictions on Russian households withdrawing foreign currency savings - taken to shield Russia’s financial system from Western sanctions imposed after Moscow sent troops into Ukraine on Feb 24.

The rouble’s strength has concerned officials as it dents Russia’s income from exporting commodities and other goods priced in dollars and euros.

To cap gains in the rouble and build up reserves, Russia’s finance ministry is proposing to raise the cut-off oil price for its fiscal rule - the level at which Moscow starts buying foreign currency with profits on energy sales - to US$60 a barrel, the Vedomosti daily reported on Tuesday (Jul 19).

This week, the central bank, which supports the idea of the free-floating rouble, can ease upside pressure on the currency by cutting rates. Analysts polled by Reuters on average expect it to trim the key rate by 50 basis points to 9 per cent.

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Russian stock indexes were mixed.

The dollar-denominated RTS index was 0.1 per cent higher at 1,169.8 points. The rouble-based MOEX Russian index fell 1 per cent to 2,076.3 points. REUTERS