MOSCOW: The rouble strengthened to a one-week high against the dollar on Monday, supported by the start of a favourable month-end tax period, as oil prices edged lower and the spectre of geopolitical risk continued to lurk over Russian markets.
By 0848 GMT, the rouble was 1.1% stronger against the dollar at 61.41, hitting its strongest point since Oct. 10. It gained 0.6% to trade at 60.35 versus the euro and firmed 1.6% against the yuan to 8.47 , a near two-week high. “The tax period, which has formally started, will gradually gain momentum, and with it volumes of foreign currency sales by exporters for tax purposes,” said Dmitry Polevoy, head of investment at Locko Invest.
Export-focused firms usually convert foreign exchange revenues into roubles to pay domestic tax liabilities, which supports the Russian currency. The rouble is the world’s best-performing currency this year, supported by capital controls and slumping imports after Western governments imposed hefty sanctions on Russia over its actions in Ukraine, while scores of foreign companies paused operations in the country.
Brent crude oil, a global benchmark for Russia’s main export, was down 0.1% at $91.60 a barrel.
“The IMOEX index remains in a tight range lacking any positive drivers,” said BCS Global Markets. “On the other hand, RTS should power higher on further rouble appreciation – typical for the end-of-the-month tax period.” Russian stock indexes were higher, clipping their highest points since Oct. 7.
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