MOSCOW -The Russian rouble firmed past the 59 mark against the dollar on Monday and rallied against the euro, reversing earlier losses after volatile swings in recent sessions, as the market continued to wait for updates on currency interventions.
The rouble is down around 16% from the more than seven-year highs hit in late June, having dropped sharply after several officials voiced concerns about its strength, which dents Russia’s income from exporting commodities and other goods priced in dollars and euros.
By 1500 GMT, the rouble was 2.4% stronger against the dollar at 59.47, earlier touching 58.80, its strongest mark since July 5. It gained 3.8% to trade at 59.98 versus the euro, earlier strengthening to 59.40.
The rouble is the world’s best-performing currency https://emea1.apps.cp.thomsonreuters.com/Apps/NewsServices/mediaProxy?apiKey=6d416f26-7b24-4f31-beb6-1b5aa0f3fafb&url=http%3A%2F%2Ffingfx.thomsonreuters.com%2Fgfx%2Frngs%2FGLOBAL-CURRENCIES-PERFORMANCE%2F0100301V041%2Findex.html so far this year, boosted by measures – including restrictions on Russian households withdrawing foreign currency savings – taken to shield Russia’s financial system from Western sanctions imposed after Moscow sent troops into Ukraine on Feb. 24.
The currency has also benefited from soaring proceeds from commodity exports and a sharp drop in imports.
Analysts have said there is little difference between 50 and 60 roubles to the dollar in terms of how critical it is for the budget. Officials prefer a rate of 70-80, they have said.
“(The rouble) may return to 55 to the dollar ahead of quarterly taxes and dividend payments,” said Dmitry Polevoy, head of investment at Locko-Invest.
“We also doubt that the recovery of imports and fall of exports will be significant enough in July to strongly affect the rouble.”
The rouble may see weaker upside pressure from interest rates at home as the central bank is widely expected to cut its key rate from 9.5% at the July 22 board meeting after Russia posted a drop in consumer prices in June.
The central bank could cut the key rate by 50-100 basis points next week, Promsvyazbank analysts said.
Russian stock indexes were mixed on Monday.
The dollar-denominated RTS index was up 0.5% at 1,150.2 points. The rouble-based MOEX Russian index was 2.4% lower at 2,169.8 points.
Russian stocks remain attractive in the longer run as they are cheap and due to expectations that the central bank’s rates will go down, Finam brokerage said in a note.
(Reporting by Reuters; Editing by Amy Caren Daniel and Alison Williams)
