MOSCOW: The rouble strengthened past 59 against both the dollar and the euro in volatile trade on Tuesday, supported by a strong Russian current account surplus, while stock indexes slipped.
Shares in gold miner Petropavlovsk plunged 38% after the company said it plans to file for administration in a bid to protect its business as it struggles to repay loans owed to sanctions-hit lender Gazprombank.
At 1041 GMT, the rouble was 0.4% stronger at 58.66 against the dollar, which climbed to a near 20-year high against a basket of currencies on the global market and nearly reached parity with the euro.
The rouble gained 1.4% to 58.42 to the euro on the Moscow Exchange, its strongest since July 5.
The rouble became the world’s best-performing currency this year, boosted by measures including restrictions on Russian households withdrawing foreign currency savings, taken to shield Russia’s financial system from Western sanctions imposed after Moscow sent troops into Ukraine on Feb. 24.
The currency has also benefited from soaring proceeds from commodity exports and a sharp drop in imports that helped to more than triple Russia’s current account surplus in the first half of 2022 to $138.5 billion, data showed on Monday.
Russian rouble recovers past 61 vs dollar after sharp slide
The firming rouble, which soared to 50 to the dollar in June from a record low of 121.53 hit in March, raised concerns among policymakers and export-focused companies as its strength dents state budget and corporate revenues from selling goods abroad.
Finance Minister Anton Siluanov said in an interview with Vedomosti business daily that the rouble rate near 50 to the dollar is “not our new reality”, calling for the need to create a system that would make the exchange rate predictable.
Kremlin spokesperson Dmitry Peskov said the excessive rouble firming is the “subject and topic for special attention for the government, our regulator and this issue is really high on the agenda”.
The rouble could extend gains to the range of 56-58 on Tuesday, Promsvyazbank analysts said.
On the stock market, the dollar-denominated RTS index fell 1.5% to 1,137.6 points. The rouble-based MOEX Russian index was 2% lower at 2,117.4 points.
“The Russia trade may well see some select cherry picking, especially in Gazprom following Russian finance minister Siluanov’s statement that the dividend decision is a one-off,” BCS Global Markets said in a note.
Siluanov said the decision by gas giant Gazprom not to pay dividends this year for the first time since 1998 did not mean it would not do so in the coming years.
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