Russian rouble surges past 68 vs dollar, stocks mixed

[May 11, 2022]  (Reuters) - The Russian rouble pared early losses and surged past 68 against the U.S. dollar on Wednesday, boosted by capital controls, while stocks were mixed after a long weekend.

Russian rouble coin is seen in this illustration taken April 7, 2022. REUTERS/Dado Ruvic/Illustration

The rouble has been volatile for weeks in thin trade in Moscow, propped up by capital controls but pressured by concerns about more sanctions being imposed on Moscow over what it calls a "special military operation" in Ukraine.

At 1034 GMT, the rouble was up 2.5% to 67.64 against the dollar on the Moscow Exchange, not far from last week's high of 65.31 - its strongest level since March 2020.

"Exporters are likely to beef up FX sales starting today, as they need roubles to pay taxes in two weeks. Also, they will be selling FX revenues accumulated over the long weekend," Sberbank CIB said in a note, explaining gains in the rouble.

Against the euro, the rouble jumped 2.6% to 71.47, around levels where it used to trade before the COVID-19 pandemic hit in 2020.

The rouble is currently being supported by the mandatory conversion of foreign currency by exporters and restrictions on capital outflows, while demand for FX from importers remains weak. Without the emergency measures imposed by the central bank the rouble would have been weaker.

"The Russian rouble's fortunes are increasingly disconnected from the health of the Russian economy as international sanctions tighten," ratings agency Scope said in a note.

Further rouble appreciation could pose risks for the budget, analysts say. Addressing the issue, the central bank has indicated it could ease some of its capital controls.

The rouble may see downside pressure mounting in the medium term as the country's trade surplus should decline after Russia issued details on so-called parallel imports of goods, Promsvyazbank analysts said in a note.

Last week, Moscow published a list of goods from foreign carmakers, technology companies and consumer brands that the government has included in a "parallel imports" scheme aimed at shielding consumers from business isolation by the West.

Russian stock indexes were mixed. The dollar-denominated RTS index rose 1.9% to 1,108.7 points. The rouble-based MOEX Russian index shed 0.4% to 2,381.7 points.

(Reporting by Reuters; Editing by Mark Potter)

 

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