Russian rouble slips despite month-end taxes, bond auctions

MOSCOW: The Russian rouble slipped against the dollar on Wednesday along with other emerging market currencies, despite receiving support from month-end tax payments and investor expectations of high demand for government bonds.

At 0720 GMT, the rouble was 0.47 percent weaker against the dollar at 63.99 and had lost 0.33 percent to trade at 71.73 versus the euro.

Elena Kozhukhova, an analyst at Veles Capital, said the rouble could dip on Wednesday morning "under pressure from deteriorating market sentiment" as Asian equity markets slipped and several emerging market currencies weakened.

The rouble this week has received a boost from month-end taxes, which usually prompt export-focused companies to convert their foreign currency to meet local duties.

Russia's finance ministry is set to auction on Wednesday two issues of rouble-denominated OFZ bonds maturing in April 2030 and July 2024.

Demand for these bonds, which serves as a gauge for global sentiment toward Russian assets and usually supports the rouble, have soared in recent months after uncertainty surrounding possible new US sanctions on holdings of Russian debt.

Last week the ministry sold $1.95 billion worth of bonds, close to the record of $2.13 billion it had sold earlier this month.

"Because of the absence of sanctions rhetoric and demand for rouble assets, we expect a successful placement of OFZ bonds on April 24, which will support the national currency," said Alexandra Ovchinnikova, an analyst at Freedom Finance.

Russia's economy ministry said this week that inflows of foreign funds into OFZ bonds will support the rouble this year despite a projected drop in oil prices.

The rouble has been buttressed in recent weeks by high oil prices. But prices for Brent crude oil, a global benchmark for Russia's main export, slipped on Wednesday amid signs that global markets remain adequately supplied.

Investors are awaiting the Russian central bank's rate-setting meeting on Friday, where analysts expected it to hold the key rate at 7.75 percent.

Russian stock indexes were down.

The dollar-denominated RTS index was down 0.67 percent to 1,268.82 points. The rouble-based MOEX Russian index was 0.40 percent lower at 2,577.17 points.