MOSCOW: The rouble firmed to its strongest in nearly a week against its currency basket on Monday, benefiting from the start of domestic tax payments and a sharp sell-off in the euro on concerns about European debt. Although global oil prices retreated slightly, they remained supportive. Urals crude held around $120 a barrel a level Russian Finance Minister Alexei Kudrin said would erase the budget deficit next year, if maintained.
The rouble added as much as 11 kopecks or 0.3 percent versus the euro-dollar basket used by the central bank to manage the currency, rising to 33.64, its strongest since April 12. By 0848 GMT it had trimmed gains slightly to trade at 33.67.
Demand for roubles was boosted by Russian exporters converting foreign currency revenues to pay domestic taxes.
"It appears that at end of the tax period, (foreign) currency selling by exporters kicked off, and that was behind the rouble appreciation," analysts at VTB Capital said in a note.
"We also believe that some investors decided to go long rouble, utilising the local currency weakness as oil still looks solid."
Valued added tax payments are due by April 20, while excise duties and the mineral extraction tax must be paid by April 25. Trust Bank estimates that the tax payments could take a total of some 350 billion roubles ($12.41 billion) out of the system.
Against the euro, the rouble firmed 0.5 percent or 20 kopecks to 40.38, as the European single currency came under broad pressure on increased talk of a possible Greek debt restructuring and uncertainty over Portugal's bailout.
Versus the dollar, the rouble was little changed at 28.18.
Kudrin attributed the rouble's recent strength to high oil prices, but said that trend is unlikely to last forever, forecasting a broadly stable Russian currency on the horizon of two to three years.
Comments
Comments are closed.