Rouble soars as markets reopen after Russians vote to extend Putin rule

MOSCOW: The rouble strengthened on Thursday, bouncing back from a five-week low as markets reopened after Russians voted in favour of changes that would allow President Vladimir Putin to remain in the Kremlin until 2036.

Oil prices at a one-week high and promising news from vaccine trials supported the rouble, even as the threat of a second wave of COVID-19 cases remained high.

Russian markets were closed on Wednesday as a week of voting reached its climax, with Russians overwhelmingly approving constitutional amendments that will allow Putin to seek two additional terms as president. The vote was condemned by Kremlin critics as illegitimate and illegal.

By 1424 GMT, the rouble was 1.3% stronger against the US dollar at 70.34, pulling away from the 71.34 mark reached on Tuesday, its weakest against the greenback since May 27.

Versus the euro, the rouble had strengthened 1% to trade at 79.20.

Brent crude oil, a global benchmark for Russia's main export, was up 1% at $42.47 a barrel.

Risk appetite was improved by a prospective COVID-19 vaccine from Pfizer and Germany's BioNTech, which was found to be well-tolerated in early-stage human trials.

However, the threat of new, serious US sanctions against Russia is growing, said Alfa Bank in a note, with more and more US officials calling for reprisals, should a report that Russia paid the Taliban to kill US soldiers in Afghanistan be confirmed.

The rouble was further buttressed by a positive US jobs report, with nonfarm payrolls increasing by 4.8 million jobs in June, but ING Economics warned this did not tell the whole story as millions were still claiming unemployment benefits.

Russian stock indexes were rising.

The dollar-denominated RTS index was up 2.9% to 1,247.8 points. The rouble-based MOEX Russian index was 1.6% higher at 2,786.5 points.