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Russian rouble weakens past 80 vs dollar, stocks fall sharply

Published 04/14/2022, 04:23 AM
Updated 04/14/2022, 02:06 PM
© Reuters. FILE PHOTO: A picture illustration shows Russian rouble banknotes of various denominations on a table in Warsaw, Poland, January 22, 2016. REUTERS/Kacper Pempel/File Photo

(Reuters) -The Russian rouble weakened on Thursday, driven by expectations that Russia may relax its temporary capital control measures further, while stocks fell sharply as the country continued what it calls "a special military operation" in Ukraine.

The Russian central bank is considering easing requirements for mandatory foreign currency revenue sales by export-focused companies, business daily Vedomosti reported, citing a central bank official.

Currently, Russian exporters are obliged to sell 80% of their forex revenues in the first three days after receiving it under a rule established by President Vladimir Putin in late-February to limit the rouble's volatility amid western sanctions.

The rouble ended trading on Moscow Exchange 1.3% lower at 80.90, heading away from its strongest level since Nov. 11 of 71 it hit last week.

Against the euro, the rouble shed 0.7% to 87.00 after briefly sliding beyond the 90 mark in jittery trade.

The rouble eased this week after the central bank scrapped a 12% commission for buying foreign currency through brokerages and promised to lift a temporary ban on selling foreign exchange cash to individuals from April 18.

But the rouble retains support from export-focused companies that are still obliged to sell their forex revenues on the domestic market.

Russian companies are expected to increase offer of forex this month due to large tax payments, which opens the door for gains in the rouble to 75 to the greenback by end-April, Sberbank CIB said in a note.

On the bond market, yields on 10-year OFZ bonds, which move inversely to their prices, declined to 10.49% on Thursday from an all-time high of 19.74 hit on March 21 when trading resumed.

Yields are now driven by expectations that the central bank will continue cutting rates this year after raising the key interest rate to 20% in an emergency move in late February, which was followed by a cut to 17% last week.

The central bank said it has not bought OFZs since March 23, adding that pricing on the OFZ market "has a purely market nature."

Russian actions in Ukraine remained in focus, along with a risk of new Western sanctions and expectations that the economy is heading for its sharpest contraction since 1994.

Inflation has already accelerated to its highest since February 2002, reaching 17.5% in annual terms as of April 8.

© Reuters. FILE PHOTO: A picture illustration shows Russian rouble banknotes of various denominations on a table in Warsaw, Poland, January 22, 2016. REUTERS/Kacper Pempel/File Photo

Russian stock indexes were down.

The dollar-denominated RTS index fell 5.6% to 941.05 points. The rouble-based MOEX Russian index ended the day 4.9% lower at 2,404.7 points.

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