Russian rouble hits more than 1-month high after central bank hikes rates
- The central bank, which had been widely expected to raise interest rates to rein in high inflation due to the rouble's weakness, hiked by a bigger than expected 50 basis points to 5%.
- Against the euro, the rouble gained 0.3% to 90.37 , nearing a more than two-week high.
MOSCOW: The rouble strengthened past 75 to the dollar to hit a more than one-month high on Friday, extending gains after the central bank hiked its key rate and Russia said it had started withdrawing troops from the area near the border with Ukraine.
The central bank, which had been widely expected to raise interest rates to rein in high inflation due to the rouble's weakness, hiked by a bigger than expected 50 basis points to 5%.
An online media conference with Governor Elvira Nabiullina is due at 1200 GMT.
By 1043 GMT, the rouble was 0.6% stronger against the dollar at 74.99, earlier hitting 74.76, a level last seen on March 22 , and heading well away from the 2021 low of 78.0450 touched in early April.
Against the euro, the rouble gained 0.3% to 90.37 , nearing a more than two-week high.
The rouble received a boost from reports that Russia ordered its troops to end military drills in the annexed peninsula of Crimea and moved troops away from the border with Ukraine in an apparent end to a buildup of tens of thousands of soldiers that had alarmed the West.
"Geopolitical tension has significantly eased, bolstering the Russia-risk trade," BCS brokerage said.
But the geopolitical premium paid for the rouble remains significant. In early-2020, when oil prices, one of the main drivers of the rouble's exchange rate, were near current levels around $66 a barrel, the rouble stood at 61-62 to the dollar.
"We believe that the FX rate of the rouble prices in the geopolitical risks adequately at this point. At the same time, from our analysis we believe the rouble is fundamentally undervalued and hence attractive," said Thomas Clarke, portfolio manager, William Blair's Dynamic Allocation Strategies (DAS).
Russian stock indexes were mixed.
The dollar-denominated RTS index was up 0.2% to 1,504.4 points, a more than one-month high. The rouble-based MOEX Russian index was 0.5% lower at 3,581.5 points, falling away from the record high of 3,607.75, hit on Thursday.
Comments
Comments are closed for this article.