Stocksak: Rouble firms surpass 61 vs. dollar to 2-week high in tax payments support

© Stocksak. FILE PHOTO – Sheets of the new Russian 100-rouble banknotes can be seen at the Goznak printing plant in Moscow, Russia, July 6, 2022. Moscow News Agency/Handout via REUTERS

By Alexander Marrow

MOSCOW (Stocksak). -The rouble rose above 61 to the dollar on Friday, a two-week high. This was supported by a favorable month-end tax period. Geopolitics continued to exert control over Russian markets.

At 60.92 GMT, the rouble was 0.8% more than the dollar, its highest point since Oct. 7.

It gained 1.8% to trade as 59.50 against the euro, earlier clipping an eight-week high. It firmed 1.5% against yuan at 8.30, its strongest mark ever since Oct. 5.

The rouble is the best performing currency in the world this year. It’s supported by capital controls, slumping imports, and capital controls after Western governments imposed severe sanctions on Russia for its actions in Ukraine. Hundreds of foreign companies also stopped operations in the country.

Veles Capital wrote in a note, “The Russian currency continues consolidating on the back of tax period,”

The rouble is supported with a month-end tax period, which usually sees export-focused businesses convert foreign exchange revenue into roubles to cover domestic tax liabilities.

Russia’s markets remain vulnerable to wild bouts volatility due to the ever-present threat from more Western sanctions on Moscow’s actions in Ukraine.

Investors are also anticipating the central bank rate decision next week.

“Since September’s meeting, both new pro-inflationary as well as disinflationary elements have emerged,” stated Igor Rapokhin (chief debt market strategist at SberCIB investment Research). He expects the Bank of Russia will keep its key rate at 7.5% Oct. 28.

Global benchmark for Russia’s main export, – was up 0.1% at $92.5/barrel

BCS Global Markets said that “the Russian stock market is still dominated sentiment trading.” “The iMOEX entered a consolidation phase in September. However, seesawing could continue in the near term.”

Russian stock indexes opened lower Friday but managed to rebound and move back into positive territory.

The dollar-denominated RTS (Rows and Treasury) index rose 0.6% to 1,048.0 point, after reaching its highest point in Oct. 6. The MOEX Russian, a rouble-based index, was 0.1% lower at 2,026.7 points.

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