Friday, 13 March 2015 01:56
MOSCOW: The Russian rouble firmed on Thursday, helped by rising oil prices, as investors waited for news about the health of President Vladimir Putin and a central bank rate decision on Friday.
At 1511 GMT the rouble was about 1.1 percent stronger against the dollar at 60.94 and 0.4 percent stronger at 64.80 against the euro.
Firming oil prices, with Brent crude rising towards $ 58 a barrel, and the weaker euro were the key drivers pushing up the rouble rate.
“The rouble’s exchange rate holds within the range of 60-63 roubles (per dollar), which we believe is fundamentally justified at the current level of oil prices,” analysts at VTB Capital wrote in a morning note.
Alexei Yegorov, an analyst at Promsvyazbank, said that as long as oil remains below $ 60 a barrel, there could hardly be any talk of the rouble firming below 60 roubles per dollar.
But analysts said investors were becoming nervous about reports that Putin is unwell, although Kremlin’s spokesman told Reuters on Thursday the president is in good health.
The ongoing uncertainty over payments by Ukraine for gas supplies, which Kiev sends almost on a day-by-day basis, was an additional worry for investors.
“Some instability in the current geopolitical situation comes from the lack of an agreement between Ukraine and Russia on the gas issue as well as media and social networks reports about a possible illness of Vladimir Putin,” Sofia Kirsanova, an analyst at Raiffeisen Capital in Moscow, wrote in a note.
Investors are also watching for a forecast cut in Russia’s main interest rate from 15 percent on Friday..
“The rouble will balance between the behaviour of oil prices and expectations of a rate cut by the central bank,” analysts at Rosbank wrote in a note.
A rate cut would dent the profits investors can make from carry trade operations. Interest rates in Russia are significantly higher than in the West.
Russian share indexes were mixed, reflecting the rouble’s performance. The dollar-based RTS index was up 1 percent to 857 points while the rouble-based MICEX was down 0.8 percent to 1,658 points.
Shares in Russian retailer Lenta outperformed the broad market, trading 6.8 percent higher after the company said that it expects strong sales growth in 2015.
Copyright Reuters, 2015
