MOSCOW: The Russian rouble strengthened on Tuesday, buoyed by firmer oil prices which have shrugged off the failure of global producers to agree an expected output freeze on Sunday.
At 0830 GMT, the rouble was 0.7 percent stronger against the dollar at 65.65 and had gained 0.6 percent to 74.40 versus the euro.
Brent crude oil, a global benchmark for Russia's main export, was up 1.2 percent at $43.40 a barrel, similar to its level on Friday before the oil producers' talks in Doha on Sunday.
Both Brent and the rouble fell sharply on Monday morning following the failure of the talks to agree an oil production freeze.
But the losses were reversed later in the day as a strike in Kuwait diminished oil supply, with the rebound continuing on Tuesday.
Teletrade analyst Alexander Egorov said in a note that the markets' reaction showed the oil price rally since February was only partly driven by expectations of an output freeze, with fundamental factors such as declining U.S. shale production playing a bigger role.
"The positive trend on the oil market will probably continue," he said. "In this scenario, the medium-term prospect for the dollar/rouble pair is striving for the 60-65 range."
Other analysts were more cautious however, warning that support for oil prices from the strike in Kuwait would be short-lived.
"The conclusion of the strike will again return the (oil) market to a condition of stubborn oversupply," VTB24 analyst Stanislav Kleshchev said in a note. "But betting on a reversal of the rising trend for oil since the start of the year is clearly premature."
Analysts said the rouble is also being supported this week by exporters' conversions of forex to raise funds for monthly tax payments. Mineral Extraction Tax, a major tax paid by large commodity producers, falls due on Monday.
Russian share indexes also rose on Tuesday, buoyed by a positive mood on global stock markets as well as the firmer oil price.
The dollar-denominated RTS index was up 1.8 percent to 916 points, while the rouble-based MICEX was 0.9 percent higher at 1,910 points.
Comments
Comments are closed for this article.