The Russian rouble firmed towards multi-week highs on Monday after Friday's central bank rate cut boosted demand for Russian OFZ treasury bonds, while stocks slid slightly from all-time highs hit last week. The rouble was 0.3% stronger at 64.18 as of 1420 GMT after briefly firming to 64.13, just short of an eight-week high.
"We think USD/RUB will likely retest strong support at 64.2, but we do not expect a break below this level given the benign outlook for the greenback," Sberbank CIB said in a note. The rouble extended gains it posted on Friday when the Bank of Russia trimmed the key rate to 7.50% from 7.75%, lowering the cost of lending for the first time since March 2018 and promising to deliver one or two more cuts later this year.
Dovish monetary policy decisions and expectations tend to support prices of Russian treasury bonds, known as OFZs, which are popular among foreign investors. Demand for such bonds usually supports the rouble as market players convert foreign currency into roubles.
Versus the euro, the rouble was 0.1% stronger at 72.12. Russian stock indexes were steady, pricing in swings in oil prices. Brent crude oil, a global benchmark for Russia's main export, was down 0.4% at $61.76 a barrel. The dollar-denominated RTS index rose 0.5% to 1,347.2, while the rouble-based MOEX index gained 0.2% to 2,745.1 points, below an all-time high of 2,772.06 hit on Friday.
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