MOSCOW: The rouble climbed to a near two-week high on Thursday, approaching the 89 threshold to a weaker dollar after dovish comments from the US Federal Reserve, while the Russian market awaited an expected interest rate hike to 16% on Friday.
The dollar was under pressure on Thursday after the Fed’s latest economic projections indicated that the interest rate hike cycle has come to an end and lower borrowing costs are coming in 2024.
At 0727 GMT, the rouble was 0.5% stronger against the dollar at 89.53, its strongest point since Dec. 1.
It had lost 0.5% to trade at 97.49 versus the euro and shed 0.1% against the yuan to 12.52.
Most analysts polled by Reuters expect Russia to raise interest rates by 100 basis points to 16% on Dec. 15.
Inflation pressure exacerbated by labour shortages and lending growth is expected to force the central bank to extend its monetary tightening cycle to one last hike.
“We do not exclude that tomorrow the rouble may undergo a corrective drop on the central bank’s setting of a new key rate,” Alexei Antonov of Alor Broker said.
The rouble has also been supported by capital controls forcing some exporters to convert a portion of their foreign currency revenues into roubles.
Meanwhile, pressure from the expiry of a month-end tax period has now subsided.
Russian rouble firms to over one-week high vs dollar
The market is also likely to pay close attention to a speech by Russian President Vladimir Putin on Thursday.
Putin, who last week said he would run again for election next year, faces numerous economic challenges, but the West’s limited success in imposing an oil price cap is easing pressure for now.
Brent crude oil, a global benchmark for Russia’s main export, was up 0.6% at $74.73 a barrel. Russian stock indexes were higher.
The dollar-denominated RTS index was up 1% to 1,072.8 points.
The rouble-based MOEX Russian index was 0.6% higher at 3,048.9 points.
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