Rouble stabilises near 104 vs dollar as cenbank holds rates

[March 18, 2022]  (Reuters) -The Russian rouble eased slightly in light trading in Moscow on Friday, stablising near a psychologically important threshold of 100 against the dollar after the central bank opted to hold rates at 20%.

Russia's central bank kept its key interest rate unchanged on Friday, as predicted in a Reuters poll of analysts, following an emergency rate hike in late February designed to support financial stability.

The central bank warned of higher inflation and an economic contraction this year but did not give new forecasts.

Governor Elvira Nabiullina, who was nominated for another term by President Vladimir Putin earlier on Friday, will present the rate decision and shed more light on future steps at 1400 GMT, two hours later than originally scheduled.

By 1121 GMT, the rouble was 1.2% weaker against the dollar at 104.37 after earlier firming to 101.70, a level last seen on March 4. Against the euro, the rouble gained 0.1% to 113.81, small moves compared to recent wild swings.

The rouble showed limited reaction to an indication that Russia may have averted a default on its Eurobonds.

A source familiar with the situation told Reuters that coupon payments on Russian sovereign bonds due this week were received by correspondent bank JPMorgan, processed and the bank then made an onwards credit to the paying agent Citi.

The finance ministry said it had met its coupon payment obligations in full.

The rouble has taken a hit in the last few weeks from unprecedented Western sanctions against Russia, along with increased demand for foreign currency that prompted the central bank to ban the selling of cash dollars and euros to individuals at banks' offices.

A month ago, the Russian currency traded at around 76 to the dollar and 85 to the euro.

Trading on the stock market section on the Moscow Exchange has been closed since Feb. 28.

Russia sent tens of thousands of troops into Ukraine in late February in what it called a special operation to degrade its southern neighbour’s military capabilities and root out people it called dangerous nationalists.

Ukrainian forces have mounted stiff resistance and the West has imposed sweeping sanctions on Russia in an effort to force it to withdraw its forces.

(Reporting by Reuters; editing by Jason Neely and Barbara Lewis)

 

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