Home Business Russian rouble recovers from one-week low as tax payments loom

Russian rouble recovers from one-week low as tax payments loom

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The rouble recovered from a more than one-week low against the dollar in early trade on Thursday, strengthening with the support of upcoming month-end tax payments that usually benefit the Russian currency.

By 1236 GMT, the rouble was 0.4% stronger against the dollar at 69.02, having earlier hit 69.73, its weakest point since Jan. 18.

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It had pared losses to gain 0.3% to trade at 75.18 versus the euro and shed 0.3% against the yuan to 10.24 .

The rouble has been buttressed this month by large FX sales by the government, which is offloading up to 3.2 billion roubles ($46.11 million) per day of Chinese yuan, a move analysts say could lead to a vicious circle that sees the rouble strengthen and further reduces the Kremlin’s crucial export revenues.

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Others expect a more limited effect.

“Foreign currency interventions have exhausted their influence on the rouble rate and quotes have entered a weakly rising trend,” Finam brokerage said in a note.

The rouble may test the 70 mark to the dollar this week, they added.

The Russian currency should gain support from month-end tax payments, due on Jan. 30, when exporters usually convert foreign exchange revenue to pay local liabilities, but has struggled to make any strong moves this week.

“Geopolitical tensions seem to be fueling heightened demand for FX,” said SberCIB Investment Research in a note.

Citing the need to support key sectors amid the challenging geopolitical conditions, Russia’s finance ministry on Thursday proposed scrapping liquidity restrictions for spending on “anti-crisis” investments from its National Wealth Fund (NWF).

Brent crude oil, a global benchmark for Russia’s main export, was up 1.4% at $87.3 a barrel.

Russian stock indexes were higher.

The dollar-denominated RTS index was up 0.5% to 992.1 points. The rouble-based MOEX Russian index was 0.2% higher at 2,173.8 points. ($1 = 69.4000 roubles) (Reporting by Alexander Marrow; additional reporting by Elena Fabrichnaya; Editing by Kim Coghill, Kirsten Donovan)


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