MOSCOW: The rouble strengthened on Wednesday, despite a softening of the oil price, ahead of an auction for rouble-denominated treasury bonds that is expected to attract sizeable foreign demand.
At 0800 GMT the rouble was up 0.3 percent against the dollar to 32.79, and 0.3 percent against the euro to 40.22, gaining against its euro-dollar currency basket to 36.12.
"There are visible flows from exporters, and also some rouble buying from speculators, including global hedge funds. There could be some support for the rouble from the OFZ auction today, with non-residents trying to get rouble funds to participate in the auction," said Dmitry Polevoy, economist at ING.
Russia's Finance Ministry is attempting to raise 35 billion roubles by issuing 5-year and 15-year OFZ treasury bonds at an auction later today. Last week's bond auction saw unusually strong demand.
Investor interest has been kindled by a regulatory decision to allow international clearing systems to open nominal holding accounts in Russia, as part of a liberalisation of the government bond market that will dramatically ease market access for international investors.
Getting ready for the monthly tax payments, which start on Monday and require exporters to convert their foreign currency revenues, has also lent rouble some support.
Russian stocks weakened on Wednesday, after a positive day on Tuesday, dragged down by a softer oil price and a pessimistic mood on international markets ahead of US Federal Reserve minutes.
At 0800 GMT the rouble-denominated MICEX index was down 1.1 percent to 1406.8, while the dollar-denominated RTS index fell 0.7 percent to 1353.8.
Russian markets followed down the oil price, with Brent declining overnight, although a firming of the oil price on Wednesday morning, to just under $99 per barrel, did little to lift the market mood.
Markets are in waiting mode ahead of minutes of the Federal Open Market Committee of the US Federal Reserve, expected on Wednesday, which may provide clues on whether monetary policy will be loosened to stimulate flagging economic growth.
Despite the gloomy mood on global markets, Russian corporates are continuing to eye the Eurobond market. Gazprom plans to raise $2 billion this month, with a 10-year dollar bond with yield guidance of 5.5 percent, as well as a possible euro bond.
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