Russian rouble climbs on US stimulus hopes, rising oil

MOSCOW: The Russian rouble firmed on Wednesday ahead of a treasury bond auction, helped by rising oil prices and US Treasury Secretary nominee Janet Yellen advocating for substantial fiscal relief to aid the post-pandemic recovery, supporting risk assets.

The rouble has recouped losses from a sanction-led sell-off on Tuesday fuelled by the arrest of Kremlin critic Alexei Navalny on his return to Russia for the first time since being poisoned last summer.

At 0744 GMT, the rouble was 0.5% stronger against the dollar at 73.30 and had gained 0.3% to trade at 89.09 versus the euro.

Yellen, at her confirmation hearing on Tuesday, said the benefits of a big stimulus package are greater than the expenses of a higher debt burden.

US President-elect Joe Biden, who will be sworn into office on Wednesday, last week laid out a $1.9 trillion stimulus package proposal to boost the economy and speed up the distribution of vaccines.

Despite the risk-on sentiment, specific problems added to uncertainty engulfing Russian assets. The United States sanctioned a ship involved in building the Gazprom-led Nord Stream 2 gas pipeline, threatening the $11 billion project's chances of completion.

"The political theatrics surrounding Navalny, the continual NS2 blockades and the unknown quantity of the new Biden regime are to imminently converge," said BCS Global Markets in a note.

The finance ministry is in focus as it will offer OFZ bonds at an auction later on Wednesday. These bonds are popular among foreign investors for their lucrative yields.

The rouble has now lost additional support from foreign currency sales after the finance ministry switched on Jan. 15 to purchases of 7.1 billion roubles ($96.7 million) worth of FX a day. The central bank reported the first purchases on Wednesday.

Brent crude oil, a global benchmark for Russia's main export, was up 0.6% at $56.26 a barrel, pushing Russian stock indexes higher.

The dollar-denominated RTS index was up 1.2% to 1,488.7 points.

The rouble-based MOEX Russian index was 0.6% higher at 3,465.0 points.