Russian rouble firms to near 4-week high vs euro after rate hike

MOSCOW: The Russian rouble firmed past 86 versus the euro on Monday for the first time in nearly four weeks, in the first session since the central bank raised its key interest rate to 6.75% and with investors looking ahead to a week of US data releases.

At 1053 GMT, the rouble had gained 0.5% to 85.98 versus the euro, its strongest since Aug. 18.

It was 0.2% higher against the dollar at 73.00.

The central bank opted for a more cautious step than some had anticipated on Friday, but said that more rate increases were possible and the key rate could even exceed 7% as inflation remains stubbornly high.

Those signals from Central Bank Governor Elvira Nabiullina are moderately positive for the rouble, Alor Broker analysts said in a note, but a higher key rate would hamper economic growth and the stock market.

Russia's rouble loses some shine after cautious central bank hike

The formal start of a new tax period this week should buttress the Russian currency, said Dmitry Polevoy, head of investment at Locko Invest, forecasting the rouble's strengthening to 72-72.5 against the greenback in the coming weeks.

However, a busy week of data releases from the United States in the lead-up to the Federal Reserve's Sept. 21-22 meeting, starting with consumer prices on Tuesday, could support the dollar and push emerging market currencies lower, said Promsvyazbank.

"Support from favourable oil market conditions, will just soften pressure on the rouble, in our view," it said in a note.

Brent crude oil, a global benchmark for Russia's main export, was up 1.1% at $73.75 a barrel, supporting Russian stock indexes.

The dollar-denominated RTS index was up 0.7% to 1,737.9 points. The rouble-based MOEX Russian index was 0.6% higher at 4,027.8 points, nearing a record high of 4,043.51 points hit last week.