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Markets

Russian rouble edges up on US stimulus hopes, rising oil

  • The rouble had pared early gains and was 0.2% stronger against the dollar at 73.57. It had gained 0.2% to trade at 89.12 versus the euro.
  • Yellen, at her confirmation hearing on Tuesday, said the benefits of a big stimulus package were greater than the expense of a higher debt burden.
Published January 20, 2021

MOSCOW: The Russian rouble firmed marginally on Wednesday, boosted by rising oil prices and US Treasury Secretary nominee Janet Yellen advocating for substantial fiscal relief to aid the post-pandemic recovery, supporting riskier assets.

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

By 1132 GMT, the rouble had pared early gains and was 0.2% stronger against the dollar at 73.57. It had gained 0.2% to trade at 89.12 versus the euro.

The situation on markets is favourable and the rouble could rise to 73.4 versus the dollar, said analysts from Sberbank CIB.

Yellen, at her confirmation hearing on Tuesday, said the benefits of a big stimulus package were greater than the expense 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 sold 20 billion roubles ($271.9 million) at its sole OFZ treasury bond auction 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 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 0.8% at $56.37 a barrel, pushing Russian stock indexes higher.

The dollar-denominated RTS index was up 1% to 1,485.5 points. The rouble-based MOEX Russian index was 0.8% higher at 3,469.2 points.

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