January 29, 2023


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The volatile ruble is recovering from its lowest level in almost 8 months

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MOSCOW (Reuters) – The ruble recovered some of its big losses this week after plunging to a near eight-month low in a volatile session on Thursday, as the prospect of a favorable tax period at the end of the month eased concerns about sanctions on Russian oil and gas.

And by 1641 GMT, the ruble rose 2.9% against the dollar to 68.95 after hitting 72.6325 earlier, its weakest level since April 28, which raised monthly losses to more than 15%.

It also trimmed losses to gain 2.7% to trade at 73.55 per euro, after earlier falling below the 77 mark for the first time since late April, and rebounded to gain 3.1% against the yuan to 9.77, up from nearly seven months ago. Few.

The volume of transactions in the currency exceeded 15 billion yuan ($2.15 billion), which is a record high on the Moscow Stock Exchange. Russia will start buying yuan on the market next year if oil and gas revenues meet expectations, two sources told Reuters, in a report confirmed by Finance Minister Anton Siluanov later on Thursday.

Reuters graphics

Phyllis Capital analysts wrote earlier that if the ruble stabilizes above the psychologically important levels of 70 for the dollar, 75 for the euro and 10 for the yuan, this could open new bearish horizons for the Russian currency.

The drop in export earnings in recent months has been exacerbated by the European Union’s oil embargo in December, when a cap on oil prices came into effect.

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Brent crude, a global benchmark for Russia’s main export, fell 0.3% to $82.0 a barrel.

Siluanov said the oil price cap had put pressure on the ruble in recent days, but the recovery in imports had a bigger impact.

“Restrictions have been imposed on oil and gas. They are not working today in terms of financial consequences, but they may have had a moral effect on market participants,” Siluanov was quoted by the Interfax news agency as saying.

tax support

The ruble closed last week at 64.65 against the dollar, but analysts said they expect the ruble to find a foothold next week when month-end taxes are due, which usually make Russian exporters turn over foreign currency earnings to pay domestic obligations.

Borrowing heavily in the last quarter of the year, Russia on Wednesday sold 337.8 billion rubles ($4.96 billion) of OFZ Treasury bonds.

Russian banks have bought the vast majority of government debt, with sanctions blocking access for foreign investors, who have been attracted by Russia’s high revenues.

The dominant lender is Sberbank (SBER.MM) Anatoly Popov, deputy chairman of the executive board of Sberbank, told RIA news agency that it plans to build up its liquidity stock using variable coupon bonds. The Bank holds more than 3 trillion rubles of OFZ bonds.

Russian stock indices also rebounded.

Dollar-denominated RTS index (.IRTS) Russia’s ruble-based MOEX rose 3.2% to 969.7 points, rebounding from its lowest level since Oct. 10. (.IMOEX) It was up 0.3% at 2,122.9 points.

($1 = 6.9829 CNY)

($1 = 68.1000 rubles)

Reporting by Alexandre Maru. Editing by Barbara Lewis

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