Russian rouble firms, Gazprom shares hit 7-yr high

MOSCOW: The Russian rouble firmed on Tuesday, buoyed by looming tax payments and weekly government bond auctions, while shares in Gazprom rallied to their highest since 2012 after the gas giant recommended a higher dividend payout.

The rouble, battered in thin market trade during Russia's May holidays, started regaining ground this week as traders returned to their desks.

As of 1500 GMT, the rouble was 0.6 percent stronger at 65.02 against the dollar and strengthened 0.8 percent to 72.90 versus the euro.

The rouble is expected to get support from month-end taxes that usually prompt export-focussed companies to sell foreign currency to meet liabilities at home.

The finance ministry's weekly auctions of OFZ government bonds due on Wednesday can also bolster the Russian currency. Demand for such bonds is seen as a gauge of investors' sentiment towards Russian assets.

Apart from that, "all eyes are now on external developments," said Dmitry Polevoy, chief economist at Russian Direct Investment Fund.

Oil prices were moving higher on Tuesday after Saudi Arabia said two of its oil tankers were attacked off the coast of the United Arab Emirates in an incident it described as an attempt to undermine the security of crude supplies.

Trade tensions between the United States and Washington are also in focus.

While firming throughout the day on Tuesday despite an escalation in the US-China trade war, the rouble's potential for strengthening is limited by state buying of FX.

The finance ministry increased its daily FX buying to 16.7 billion roubles ($255.25 million) between May 14 and June 6, up from the 11.6 billion roubles it purchased daily in the previous period.

"The further strengthening of the rouble in not expected in this situation," said Vasily Karpunin, an analyst at BCS Brokerage, referring to the FX purchases.

Russian stock indexes were up, with Gazprom shares gaining 16% on the day to 189.4 roubles, their highest since March 2012, after its board proposed a 2018 dividend payout of 16.61 roubles ($0.25) per share, up from a previous proposal of 10.43 roubles.

The dollar-denominated RTS index was up 2.8% to 1,241.1 points. The rouble-based MOEX Russian index was 2.1% higher at 2,561.5 points.