Russian rouble firms on COVID-19 vaccine hopes

MOSCOW: The Russian rouble firmed against the US dollar on Tuesday, buoyed by hopes that a COVID-19 vaccine could be rolled out soon and by higher oil prices and local month-end tax payments that spur demand for roubles.

At 0735 GMT the rouble was 0.6pc firmer against the dollar at 70.93, its strongest since July 15.

Against the euro, the rouble strengthened by 0.6pc to 81.20, heading away from the 11-week low of 82.60 touched on Monday.

The rouble and some other emerging market currencies were lifted by hopes that early indications from vaccine trials mean that an effective tool against the virus is on the way.

Russia, having registered more than 783,000 coronavirus cases so far, is working on its own vaccine.

Some support for the rouble is likely to come from monthly tax payments that usually prompt export-focused companies to convert foreign currency revenue to meet local liabilities.

The central bank is also in focus, with expectations that it will drop interest rates to a record low on Friday to cushion the economic blow from the COVID-19 pandemic.

In the short term, the rouble is expected to hold in a range of 70-72.50 versus the dollar, Sberbank Asset Management said.

Further out and in August in particular, the rouble could face downside pressure from investors in Russian stocks that usually convert dividends they receive into currencies other than roubles, Nordea Bank said.

Brent crude oil, a global benchmark for Russia's main export, was up 0.3pc at $43.57 a barrel, which also served to drive equities higher.

The dollar-denominated RTS index was up 2pc at 1,259.9 points while the rouble-based MOEX Russian index gained 1.3pc to 2,837.7 points.