MOSCOW: The rouble continued firming for the third straight day on Wednesday, supported by strong oil prices and preparations for tax payments, while stocks dipped slightly on profit taking after recent gains.
By 0700 GMT, the rouble had added 0.3 percent to 31.55 versus the dollar and was flat at 40.35 against the euro.
Versus the euro-dollar basket, used by the central bank to track changes on the currency market, the rouble firmed 0.2 percent to 35.45, hovering within a range of 34.70-35.70 where the central bank does not carry out interventions.
"The reasons behind the rouble's firming are expensive oil and the tax payment period. The rouble's upside move could linger till the end of tax duties, but a reverse move is possible from January 30," said Dmitry Novoselov at Nordea bank in Moscow.
Export-focused companies step up conversion of dollars and euros in the second half of every month to meet tax payments that usually withdraw several billion dollars.
The money market saw interbank lending rates rising further to 4.35 percent from around 3.0 percent seen earlier this month, but stood far below levels of nearly 6.0 percent recorded in the end of 2011.
Players will be watching closely the first this year issue of OFZ treasury bonds by the finance ministry later in the day. The ministry will offer 20 billion roubles ($632.3 million) in four-year bonds at 7.65-7.70 percent. On Wednesday, the bonds were trading at 7.65 percent.
The stock market lost an upside momentum on Wednesday, with the dollar-based RTS index down 0.1 percent to 1,474.8 points and its rouble-based peer MICEX falling 0.45 percent to 1,479.7.
Analysts at Nomos Bank recommended in a note to lock in profits in long positions after the Russian stock market has reached 2012 peaks while risk aversion fell to year lows.
Further rise in Russian stocks, however, is still widely expected thanks to oil prices at around $112 per barrel compared to an average level of $100 factored into this year's budget.
Analysts at VTB Capital see the RTS index rising to 2,200 points by the end of the year.
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