Rouble retreats from multi-month highs, stocks mixed

MOSCOW: The rouble retreated from multi-month highs versus the dollar on profit taking on Friday, while Russian stocks w
27 Jan, 2012

By 0715 GMT, the rouble had weakened 0.6 percent to 30.38 after hitting its strongest level since November at 30.20 on Thursday. Versus the euro, the rouble was flat at 39.81.

"A temporary profit taking is possible today so the rouble's rise would slow. But there are no grounds for a change in the trend," analysts at ING said in a note, adding that the rouble was likely to firm beyond 30.0 per dollar.

Against the euro-dollar basket, the rouble eased 0.4 percent to 34.63 . The central bank buys a few hundred million dollars a day when the basket falls below 34.70 to ease upside pressure on the rouble.

"There is no particular reason for a strong downside move in the rouble as high oil prices and the tax payments period remain supportive. Weakening is possible in late January or in early February," said Roman Pakhomenko, chief dealer at Lanta bank.

Month-end tax duties are adding to tension in the money market where interbank overnight lending rates have jumped to 5.3 percent from levels below 3.2 seen earlier this month.

The higher cost of short-term lending is prompting export-focused companies to convert foreign currencies to meet local liabilities.

Recent economic data suggests Russia's fundamentals were sound last year, with retail sales and capital investment rising on the back of moderating inflation.

"We think that the financial markets will be impressed by the positive side of the Russian growth story, ignoring downside risks to economic growth for now," Alexander Morozov, chief economist at HSBC in Moscow, said in a note.

The stock market hovered near 2012 highs but, like the rouble, came under pressure from investors wanting to lock in profits ahead of the weekend.

The dollar-traded RTS index slid 0.4 percent and its rouble-based peer MICEX was steady at the previous day's close.

Copyright Reuters, 2012

Read Comments