MOSCOW: The Russian rouble continued to rally for a third day on Wednesday, helped by firmer oil prices and expectations Russia may benefit from a thaw in East-West relations after recent attacks by Islamic State militants.
At 0815 GMT, the rouble was 0.8 percent stronger against the dollar at 64.65 and had gained 0.6 percent to 68.90 versus the euro.
Russian assets have been strengthening this week even though the price of oil, normally the most important driver for the Russian currency, has been languishing close to two-and-a-half-month lows.
International benchmark Brent was up 1.5 percent at $44.2 a barrel on Wednesday, following a 2.2 percent slump on Tuesday.
"This (oil price slump) didn't hinder the rouble, receiving support from prospects for a thaw in relations between Russia and the West, which may coordinate efforts in the fight against terrorism," InstaForex analyst Igor Kovalev said in a note.
On Tuesday, Russian President Vladimir Putin ordered his armed forces to step up strikes against Islamic State and to work with France as an ally, after Russia concluded a bomb attack destroyed a Russian airliner over Egypt last month.
That has fuelled speculation of a wider rapprochement between Russia and the West that may help resolve differences over the conflict in Ukraine.
However, analysts at Rosbank struck a cautious note on prospects for an East-West thaw leading to an early easing of Western financial sanctions against Russia.
"Discussions about the lifting of sanctions may lead to a short-term positive reaction of market participants; at the same time it's difficult to imagine scenarios of a full-scale lifting of sanctions," they said in a note.
"The Russian currency will find it highly difficult to consolidate at the levels reached."
Analysts said the rouble is also being supported this week by sales of forex by exporters to raise roubles for monthly taxes which fall due next week.
Russian share indexes were mixed on Wednesday, reflecting the impact of the stronger rouble which raises share prices in dollar terms but lowers them in rouble terms.
The dollar-denominated RTS index was up 1 percent to 871 points, while the rouble-based MICEX was flat at 1,787 points.
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