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Ruble lifted by domestic payments, higher oil prices

Published 08/28/2018, 04:47 AM
Updated 08/28/2018, 04:51 AM
Ruble lifted by domestic payments, higher oil prices
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MOSCOW (Reuters) - The ruble firmed slightly on Tuesday supported by domestic month-end tax payments, suspension of daily dollar purchases by the central bank and higher oil prices.

At 0811 GMT, the ruble was 0.1 percent stronger against the dollar at 67.46 <RUBUTSTN=MCX> and had gained 0.04 percent to trade at 78.84 versus the euro <EURRUBTN=MCX>.

Oil prices hit their highest since July 11 in early trade. Brent crude oil (LCOc1), a global benchmark for Russia's main export, was last up 0.47 percent at $76.57 a barrel.

The ruble found support from local month-end tax payments that end on Tuesday. To meet these duties, export-focused companies convert their dollar revenues, buying rubles.

The central bank's decision to halt daily purchases of foreign currency from Thursday last week also helped the Russian currency stabilize after sharp losses earlier in August.

The U.S. dollar touched its lowest against a basket of currencies (DXY) since early August as a U.S.-Mexico trade deal aimed at overhauling the North American Free Trade Agreement boosted appetite for riskier assets.

Analysts at Rosbank said they don't overestimate the positive contribution of these factors for the ruble and don't expect the Russian currency to fully recover in the coming weeks.

The ruble has lost almost 8 percent of its value since the beginning of the month, hit by fears of U.S. sanctions and jitters in emerging markets.

"Geopolitical tensions and sanctions risks continue to dominate," analysts at Rosbank said.

U.S. sanctions against Russia tied to a nerve agent attack in Britain, which were announced earlier this month, came into effect on Monday and a second batch of penalties may be imposed after 90 days.

U.S. senators also prepared a draft bill that includes restrictions on investment in new Russian sovereign debt and bans several state-run Russian banks from operating in the United States.

New U.S. sanctions have little impact, but more stringent measures pose credit risks, ratings agency Moody's said in a report released on Monday.

"The negative effects would come first through the monetary policy channel as the Bank of Russia slows policy interest rate cuts – or even hikes rates – due to rising risks for its inflation outlook from a weaker ruble," the report said.

Russian stock indexes were mixed.

The dollar-denominated RTS index (IRTS) was down 0.13 percent to 1,082.76 points. The ruble-based MOEX Russian index (IMOEX) was 0.25 percent higher at 2,318.71 points.

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