Rouble hits 2015 level against euro as EU prepares to pay for gas

* Rouble rallies sharply

* Hits strongest since June 2015 vs euro

* Sberbank CIB says selling gas for roubles behind rally

* Further rouble firming not welcomed by budget

May 20 (Reuters) – The Russian rouble rallied to its
strongest levels against the euro and dollar since June 2015 and
March 2018 respectively on Friday, which analysts attributed to
EU countries preparing to pay Russia for gas and to capital
controls imposed by Moscow.

Russia said on Thursday that half of gas giant Gazprom’s 54
clients have opened accounts at Gazprombank, as European
companies approach imminent deadlines to pay for their gas
supplies.

Opening such accounts became possible after EU executives
allowed member states to keep buying Russian gas without
breaching the slew of sanctions they have collectively imposed
on Russia over what Moscow calls its “special military
operation” in Ukraine that started on Feb. 24.

One of the main reasons for the rouble rally is the switch
to roubles from euros that will take place in European payments
for Russian gas, said Yuri Popov, a strategist at SberCIB
Investment Research, a unit of Russia’s No.1 lender Sberbank
.

At 0807 GMT the rouble had firmed more than 5% to 61.10
against the euro in volatile trade on the Moscow Exchange
after touching 59.02, its strongest since June
2015.

Against the dollar, it added more than 4% on the day to
59.10 after hitting 57.0750, a level not seen
since late March 2018.

The rouble has firmed around 30% to the dollar this year
despite a full-scale economic crisis in Russia, making it the
best-performing currency http://fingfx.thomsonreuters.com/gfx/rngs/GLOBAL-CURRENCIES-PERFORMANCE/0100301V041/index.html,
albeit artificially supported by controls imposed in late
February to shield Russia’s financial sector after it sent tens
of thousands of troops into Ukraine.

The rouble is being partly driven by export-focused
companies that are obliged to convert their foreign currency
revenue after Western sanctions froze nearly half of Russia’s
gold and forex reserves.

“Exporters are forced to sell (foreign currency) and there
is no one to buy it,” a trader at an investment company in
Moscow said.

Preparations for month-end taxes due next week have also
boosted demand for roubles, while demand for dollars and euros
remains low due to disrupted imports chains and restrictions on
withdrawing foreign currency from bank accounts and moving it
out of Russia.

“The key question is whether the central bank will step in
as the excessive rouble firming is not in the finance ministry’s
and budget’ plans,” Evgeny Suvorov, an analyst at
CentroCreditBank, said.

Kirill Tremasov, the head of the central bank’s monetary
policy department, said on Friday that the rouble remained a
free-floating currency, RIA news agency reported.

The central bank declined to comment on the rouble rate.

INFLATION BRAKE

Outside the Moscow Exchange, the rouble remained much
weaker. Sberbank was selling cash dollars for 68.83 roubles and
euros for 71.24 roubles.

A stronger rouble will help put a brake on inflation and is
beneficial for importers, but it hurts those who sell goods and
services abroad for foreign currency, meaning reduced incomes
for Russia’s export-dependent budget.

Analysts say Russian authorities are not interested in a
substantial rouble strengthening from current levels and expect
the currency to weaken by the end of the year.

In a sign that the authorities are ready to gradually lift
capital controls, the central bank allowed banks to sell
people’s foreign currency without any restrictions from May 20,
with the exception of U.S. dollars and euros.

Meanwhile, Russian stock indexes were mixed on Friday.

The dollar-denominated RTS index rose 2.6% to
1,278.9 points. The rouble-based MOEX Russian index was
1.4% lower at 2,402.9 points, pressured by the rouble’s
appreciation.
(Reporting by Reuters; Editing by Tomasz Janowski, Alexander
Smith and Hugh Lawson)



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *