Russian rouble slips further after tax payments end

MOSCOW: The Russian rouble fell to a 10-day low against the dollar on Thursday as support from month-end tax payments evaporated.

At 1230 GMT, the rouble was 0.6 percent weaker against the dollar at 65.20 and had lost 0.5 percent to trade at 73.21 versus the euro.

After hitting seven-month highs this month, the rouble began to fall on Wednesday as investor appetite for riskier assets fell, despite high demand for Russian treasury bonds.

Tax payments, which usually prompt export-focused companies to convert their foreign currency to meet local liabilities, ended on Thursday, depriving the rouble of its monthly support.

Still, a rise in the dollar could be used by export-focused companies to convert it into roubles for their local needs, which should cap losses in the Russian currency, said Dmitry Polevoy, chief economist at Russian Direct Investment Fund.

"Despite the volatile external backdrop, we expect the rouble to remain near 65 versus the dollar," Polevoy said.

Ksenia Yudaeva, first deputy governor of the Russian central bank, attributed the fall in the rouble this week to general trends in emerging market currencies.

"Yesterday there was quite strong movement on the markets of developing countries," TASS news agency quoted her as saying. "The rouble was actually one of the currencies least affected by that movement."

The rouble in recent weeks has been bolstered by growing foreign demand for OFZ treasury bonds. The central bank said on Wednesday that foreign investors had accounted for 25.9 percent of OFZ holders as of March 1, up from 25.0 percent a month earlier.

Prices for Brent crude oil, a global benchmark for Russia's main export, slipped on Thursday after widely watched data showed a surprising increase in U.S. stocks. Supply cuts led by OPEC and U.S. sanctions against Venezuela and Iran had in recent weeks supported oil prices.

Russian stock indexes were stable.

The dollar-denominated RTS index was little changed at 1,207.8 points, while the rouble-based MOEX Russian index  was 0.3 percent higher at 2,495.7 points.

Technical analysis suggests that the MOEX now has support levels at 2,480 and 2,465, while resistance is at 2,500, according to Finam brokerage.