Russian rouble buoyed by local tax payments and rate hike

Shoaib Ur Rehman December 17, 2018

MOSCOW: The Russian rouble firmed slightly on Monday, helped by local tax payments and last Friday’s interest rate hike, despite downward pressure from the central bank’s decision to resume foreign currency purchases in January.

At 0743 GMT, the rouble was 0.16 percent stronger at 66.65 to the dollar and had gained 0.06 percent to trade at 75.43 to the euro.

Brent crude oil, a global benchmark for Russia’s main export, was up 0.17 percent at $60.38 a barrel.

The rouble received support from local monthly tax payments that begin on Monday and continue until Dec. 28. Export-focused companies usually convert their foreign currency revenues into roubles in order to pay taxes.

Last Friday the central bank raise its key rate to 7.75 percent from 7.50 percent on Friday.

But the rouble also faced pressure from the central bank’s announcement that it would resume foreign currency purchases, which were suspended in August, from Jan. 15.

Analysts at ING said in a note that the resumption of purchases had not influenced the rouble a great deal could make the market nervous.

Analysts at Rosbank said in a note that the central bank could consider raising rates again in March if the geopolitical situation worsens or inflation expectations spike.

The market is closely watching the two-day Federal Open Market Committee meeting that begins in the United States on Tuesday. The Federal Reserve is widely expected to raise interest rates by 25 basis points.

Russian stock indexes were up. The dollar-denominated RTS index was up 0.26 percent to 1,119.40 points. The rouble-based MOEX Russian index was 0.12 percent higher at 2,368.59 points.

Copyright Reuters, 2018
 

 

 

 

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