Russian rouble edges lower vs dollar as market takes stock of rate cut
2022.07.25 11:33
FILE PHOTO: A Russian one rouble coin is pictured in front of a tower of the Kremlin and St. Basil’s Cathedral in Moscow, Russia, in this illustration picture taken June 24, 2022. REUTERS/Maxim Shemetov/Illustration
MOSCOW (Reuters) – The Russian rouble edged lower against the dollar in a jittery start to Moscow trade on Monday, adjusting to the central bank’s decision to slash interest rates on Friday, and as a rouble-supportive tax-payment period reaches its peak.
At 0730 GMT, the rouble was 0.2% weaker against the dollar at 57.39 and had gained 0.3% to trade at 58.13 versus the euro.
The rouble lost ground on Friday after Russia’s central bank cut its key interest rate by a bigger-than-expected 1.5 percentage points to 8.0% and said it would study the need for more cuts as inflation slows and an economic contraction continues for longer than previously thought.
Freedom finance analysts on Monday said the rouble would likely trade in the 55-57 range against the dollar.
“The rouble’s weakening after the rate cut will be short-lived, in our view,” they said.
The rouble has become the world’s strongest-performing currency so far this year, boosted by measures – including restrictions on Russian households withdrawing foreign currency savings – taken to shield Russia’s financial system from Western sanctions imposed after Moscow sent troops into Ukraine on Feb. 24.
Before Feb. 24, the rouble traded near 80 to the dollar and 85 to the euro.
The rouble’s strength has concerned officials as it dents Russia’s income from exports of commodities and other goods priced in dollars and euros. The central bank has eased some restrictions, but many capital controls remain in place.
Month-end tax payments that usually prompt export-focused companies to convert part of their FX revenues into roubles have supported the currency in the last fortnight.
“The peak of tax payments, which takes place today, will support the national currency and contribute to its growth,” said Bogdan Zvarich of banki.ru.
Russian stock indexes were lower.
The dollar-denominated RTS index was down 1.1% to 1,148.3 points. The rouble-based MOEX Russian index was 0.2% lower at 2,092.5 points.
