The Russian ruble opened strongly on Monday and remained strong above the 74 against the dollar. This is because the market is expecting the tax payments that companies will make this week and the central bank’s interest rate decisions on Friday.
At 7:26 AM Greenwich Mean Time, the ruble rose 2.2% against $ 73.80, centered on the levels seen before February 24, when Russia sent tens of thousands of troops to Ukraine.
It rose 2.6% to trade at 78.01 against the euro.
The ruble’s move is artificially restricted by capital restrictions imposed by the central bank as Western sanctions freeze almost half of the country’s reserves and then lose the ability to support the ruble through FX intervention. ..
The currency was backed by a record 3 trillion rubles ($ 4.25 billion) that businesses plan to pay taxes this month, according to analysts surveyed by Reuters. In order to make payments, some export-centric companies need to sell foreign currency.
Velez Capital said the tax hike could raise the ruble, but the central bank’s expected rate cut on Friday could undermine optimism.
Market players are looking forward to the central bank’s interest rate decision after two emergency interest rate movements last month. It was raised to 20% in late February and reduced to 17% on April 8.
On the other hand, Russia’s stock index was mixed.
The dollar-denominated RTS index rose 0.5% to 932.9 points. The ruble-based MOEX Russia index fell 2% to 2,188.8 points, the lowest since February 24th.
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($ 1 = 74.5280 rubles)