MOSCOW: The rouble firmed slightly on Wednesday, shrugging off a sharp drop in prices for oil, Russia’s key export, as it retained support from a record high current account surplus and the upcoming quarterly tax payments.

At 0728 GMT, the rouble was 0.2% stronger against the dollar at 58.53 after hitting 57.16 on Tuesday, its strongest since July 5.

The rouble gained 0.9% to hit 58.91 against the euro.

Analysts say the rouble has room for further gains as export-focused companies usually increase conversion of their FX revenues to pay taxes that will be higher than usual in July as both month and quarter-end payments should be made.

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.

Rouble firms past 59 to dollar, euro; Petropavlovsk shares slide

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.

The firming rouble, which rallied to 50 to the dollar in June from a record low of 121.53 hit in March, raised concerns among policymakers and exporters as its strength dents state budget and corporate revenues from selling goods abroad.

On the stock market, the rouble-based MOEX Russian index fell 1% to 2,113.4 points. Its dollar-denominated peer RTS slid 0.8% to 1,132.9 points.

“The recent poor performance of the RTS index begs a question: what is the fundamental recommendation and where it trades relative to its ‘trading brackets’,” BCS Global Markets wrote in a note.

“We note that the index is currently in the HOLD zone and would recommend start buying the market if the RTS index falls below 970 and selling if it goes above 1,350 over the next several months.”