MOSCOW: The rouble jumped on Wednesday to its strongest mark in seven years against the dollar and euro, supported by capital controls, a favourable upcoming tax period and Russia’s trade surplus.
At 0734 GMT, the rouble was 1.4% stronger against the dollar at 53.07, earlier strengthening to 52.80, its strongest mark since June 2015. It had gained 1.6% to trade at 55.36 against the euro, its strongest point since May 2015.
The rouble, which has become the world’s best-performing currency this year, is driven by Russia’s high proceeds from commodity exports, a sharp drop in imports and a ban on households withdrawing foreign currency savings.
Russian rouble climbs to strongest in 7 years vs dollar, euro
Top policymakers used Russia’s annual economic forum in St Petersburg last week to highlight the rouble’s recent strength. There are concerns this could weigh on the economy as it tips into recession amid harsh sanctions over what Moscow calls a “special military operation” in Ukraine.
The rouble is also buttressed by companies that need to pay taxes early next week. For export-focused firms that means converting dollar and euro revenue into roubles.
“Factors such as a strong balance of trade and the tax period are currently working in favour of the rouble,” said Otkritie Research. “That is, there are no reasons for the rouble to weaken.”
Russian stock indexes were mixed, hampered in part by oil prices, which dropped sharply to a more than one-month low.
Brent crude oil, a global benchmark for Russia’s main export, was down 4.4% at $109.6 a barrel.
Promsvyazbank also said the strong rouble was hampering growth of commodity companies, putting pressure on the overall stock market.
The dollar-denominated RTS index was up 0.8% to 1,390.4 points, earlier clipping a four-month high, but the rouble-based MOEX Russian index was 0.5% lower at 2,347.6 points.