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UPDATE 2-Russia rouble firms to strongest vs dollar since Jan

Published 09/17/2009, 07:37 AM
Updated 09/17/2009, 07:39 AM

*Rouble hits 8-mth high vs dlr, 6-wk high against basket

*Stock indexes rise, market liquidity tightens

(Adds finance minister comments)

MOSCOW, Sept 17 (Reuters) - Russia's rouble firmed to its strongest since January against the dollar on Thursday, but Finance Minister Alexei Kudrin said the currency's recent rise in not indicative of a sharp trend.

"Certain volatility (in the rouble) is not ruled out, but I don't think the current strengthening is significant," Kudrin said. [ID:nLH510089]

Both the currency and stock indexes continued to gain on Thursday as the U.S. currency keeps retreating and oil prices rise.

The rouble traded at 30.33 to the dollar early in the day and was also at its firmest in six weeks against the euro-dollar basket, used by the central bank to guide its exchange rate policy, at 36.77 , against Wednesday's close at 37.08. "The dollar is not doing too well globally and oil returned to rather high levels," said Alexei Zaitsev, a currency trader with UniCredit in Moscow.

Oil was steady above $72 a barrel on Thursday, taking a breather after a rise of more than 2 percent a day earlier.

Rouble liquidity has also tightened, adding to the currency's appreciation.

The central bank took steps to ease liquidity on Thursday, increasing the daily limit for its currency swaps three-fold to 15 billion roubles ($484 million) for the first time since mid-April.

The bank has also increased the limit for daily repo operations to 150 billion roubles -- the largest since the bank introduced such limits in June.

"It's obvious that the central bank has decided to inject extra liquidity," Zaitsev said.

The rouble's firming paralleled the Russian stock market's performance early Thursday, which showed gains following positive world market trends.

At 1050GMT, the MICEX Stock Exchange was trading around 1,223 points, giving back some gains from earlier in the day, but still near the year's highest levels <.MCX>.

Some analysts reckon that media reports about the U.S. decision to halt its plans to build a missile-defence system in Eastern Europe are supporting Russia's markets. [ID:nSP384538]

"We more than welcome such a move by the White House as it is a clear sign of thawing relationships between our countries, so damaged under the previous administration," said VTB Capital economists in their research note.

"It will no doubt reinvigorate bulls and give another impetus to the ongoing rally in Russian assets." (Reporting by Yelena Fabrichnaya, Lidia Kelly and Andrei Ostroukh; writing by Lidia Kelly; Editing by Toby Chopra)

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