MOSCOW: The Russian rouble recovered from touching over two-week lows in early trade on Wednesday to steady against the dollar, helped by the prospect of Thursday’s income tax payments by exporting firms, but held back by expectations of a US rate hike.
At 0752 GMT, the rouble was steady against the dollar at 60.54, after sliding to 61.20 in early trade, its weakest point since July 11. It had gained 0.6% to trade at 61.35 versus the euro, recovering from a more than two-week low of 62.0575 touched earlier.
“The Russian currency, by all accounts, is turning to short-term decline in expectation of the introduction of a new budget rule,” said Veles Capital in a note.
High-ranking sources told Reuters last week that Russia may reinstate the budget rule that diverts excess oil revenues into its rainy-day fund, setting a new cut-off oil price of $60 per barrel, and is looking for new ways to build up official reserves.
Despite sliding lower in the last week, the rouble remains the world’s strongest-performing currency so far this year, boosted by measures to shield Russia’s financial system from Western sanctions imposed after Moscow sent troops into Ukraine on Feb. 24.
These include restrictions on Russian households withdrawing foreign currency savings.
Russian rouble hits 2-week high vs dollar
High commodity prices have also buoyed the currency, although the rouble’s strength has vexed officials as it dents Russia’s income from exports of those commodities and other goods priced in dollars and euros.
Brent crude oil, a global benchmark for Russia’s main export, was up 0.9% at $105.4 a barrel, but selling difficulties caused by sanctions mean Russia has been forced to sell at a discount.
“It is worth noting that the decline in gas supplies from Russia to Europe also impacts the strengthening of positions of Western countries’ currencies,” said Promsvyazbank analysts.
Europe faces a tighter gas squeeze from Wednesday, when Russia’s Gazprom has said it would cut flows through the Nord Stream 1 pipeline to Germany to a fifth of capacity.
Investors also have an eye on the United States, where the Federal Reserve is expected to hike its key interest rate by 75 basis points.
Russian stock indexes were rising. The dollar-denominated RTS index was up 1.3% to 1,150.3 points. The rouble-based MOEX Russian index was 0.8% higher at 2,210.7 points.