Tuesday, 24 March 2015 21:32
MOSCOW: The Russian rouble rose strongly on Tuesday ahead of monthly tax payments, continuing a rally since February that has taken it to its highest levels against the dollar and euro since the end of last year.
The Russian currency has now gained 7 percent against the dollar over the last week, reflecting a weaker dollar globally as well as Russian tax payments, although it is still down almost 40 percent since the middle of last year.
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By 1615 GMT it had gained 1.3 percent against the dollar, to 57.98, and was 1.4 percent stronger at 63.38 against the euro.
The rouble hit 2015 highs earlier in the day at 57.45 against the dollar and 62.92 against the euro.
It shrugged off a weakening of the price of oil, Russia’s main export. That illustrates a recent trend whereby the rouble has proven resilient despite volatile oil prices — in sharp contrast to the second half of last year when it plunged in the face of an oil price slump and Western sanctions imposed on Russia over Moscow’s involvement in Ukraine.
The rouble’s strength on Tuesday was largely linked to impending tax payments requiring exporters to convert their foreign currency earnings into roubles.
One of the major taxes, mineral extraction tax, falls due on Wednesday, when VAT and excise taxes also need to be paid.
“The rouble is rising ahead of tomorrow’s tax payments, on account of big volumes (of forex) for sale and an absence of forex buyers,” said Pavel Demeshchuk, a trader at ING Eurasia.
The price of Brent crude oil fell more than 1 percent to $ 55.13 a barrel on Tuesday after activity in China’s factory sector fell to an 11-month low.
Analysts say that as well as the impact of monthly taxes, the rouble’s recent strength may also reflect some fundamental factors, including a drop in the size of scheduled foreign debt repayments after large repayments in February and March.
“We do not rule out that this week the rouble/dollar pair will test the 55 (roubles per dollar) mark,” Andrei Dirgin, head analyst at Alfa-Forex, wrote in a note.
Russian shares were also in positive territory, with the largest gains in the dollar-based RTS stock index which is helped by a stronger rouble.
At the market close the RTS was up 2.5 percent at 880 points, while the rouble-based MICEX index was 1 percent higher at 1,618 points.
Russian share indexes were also reflecting trends on European markets, where better-than-expected manufacturing data helped push stock indexes close to record highs on Wednesday.
Copyright Reuters, 2015
