Russian ruble strengthens in thin trade
By Alexander Winning
MOSCOW (Reuters) - Russia's rouble strengthened on Thursday as exporters sold foreign currency in response to government pressure and to meet tax payments, but trading volumes were thin as many Western markets were closed for the Christmas Day holidays.
At 0825 GMT (3.25 a.m. EST), the rouble was 1.7 percent stronger against the dollar at 52.55 RUBUTSTN=MCX and gained 1.5 percent to trade at 64.53 versus the euro EURRUBTN=MCX.
The rouble earlier hit its highest against the dollar and euro since Dec. 4 and has trimmed its losses against the greenback to around 37 percent this year.
The Russian currency is supported towards the end of each month by tax payments to the state budget that require Russian exporters to convert part of their foreign-currency earnings into rubles.
Forex sales have also risen after the government told large exporters on Tuesday that by March 1 they must bring their net foreign exchange assets back to the levels of Oct. 1.
Analysts, however, are cautious on the near-term outlook for the rouble, saying much depends on oil prices, which remain weak, and progress in talks to secure a lasting peace in eastern Ukraine.
"We think the short-term upside for the rouble is limited," Dmitry Polevoy at ING Bank said in a note, also citing the risk of Russia being downgraded to 'junk' status by ratings agency S&P as a factor weighing on investors' mood.
The central bank has spent over $80 billion defending the rouble this year amid a slump in oil prices and Western sanctions over the Ukraine crisis that have restricted Russian firms' access to international capital markets. Continued...