MOSCOW: The Russian rouble strengthened against the US dollar and China’s yuan on Friday, ahead of an anticipated interest rate hike by the central bank that is, however, not expected to have a significant short-term impact on the currency.
Analysts polled by Reuters expect the central bank to raise its main rate by 200 basis points to 23%.
President Vladimir Putin on Thursday urged the central bank to make a “balanced” rate decision, saying the Russian economy is showing signs of overheating which is stoking worryingly high inflation. By 0800 GMT, the rouble was up 1.0% at 102.50 against the dollar, according to over-the-counter market data from banks.
The rouble strengthened 0.2% to 13.99 against China’s yuan in trading on the Moscow Stock Exchange. Analysts believe the rouble’s exchange rate is being driven by factors other than monetary policy.
“Under the current conditions, the results of the central bank meeting are unlikely to significantly affect the short-term dynamics of the currency market,” Bank of Saint Petersburg analysts said in a research note.
Foreign currency inflows into Russia appeared to have stabilised after Turkey and Hungary, major importers of Russian gas, received exemptions for gas payments to Russia from the latest US financial sanctions.
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The rouble fell by as much as 15% against the dollar in November after US sanctions hit Russia’s third-largest lender Gazprombank, which handled payments for Russian energy, prompting panic buying of foreign currency.
The rouble has since regained some lost ground and stabilised above 100 to the dollar, seen by the market as a new equilibrium level where it could remain for some time provided there are no further external shocks.
One-day rouble/dollar futures, which trade on the Moscow Stock Exchange and are a guide for the over-the-counter exchange rate, were flat at 104.1.
The Russian central bank set an official exchange rate at 103.42 to the dollar.
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