January 28, 2023

The ruble is recovering from its lowest level in nearly eight months against the dollar

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MOSCOW (Reuters) – The ruble recovered on Thursday after hitting its weakest level since late April, as the prospect of a favorable tax period at the end of the month eased concerns about the impact of sanctions on Russian oil and gas.

And by 1343 GMT, the ruble rose 0.4% against the dollar to 70.68 after hitting 72.6325 earlier, its weakest level since April 28, which had caused monthly losses of more than 15%.

It also trimmed losses to gain 0.5% to trade at 75.18 per euro, after earlier falling below the 77 mark for the first time since late April, and rebounded to gain 0.4% against the yuan to 10.04, up from nearly seven months ago. Few.

Analysts of Veles Capital said that if the ruble consolidates above the psychologically important levels of 70 per dollar, 75 per euro and 10 per yuan, it could open up new bearish prospects for the Russian currency.

The drop in export earnings in recent months has been exacerbated by the European Union’s oil embargo in December, when a cap on oil prices came into effect.

Brent crude, a global benchmark for Russia’s main export, rose 0.6% to $82.7 a barrel.

Analysts expect the ruble to find a foothold next week when month-end taxes are due, which usually see Russian exporters shifting foreign currency earnings to pay domestic obligations.

Russia had been borrowing heavily in the last quarter of the year and on Wednesday sold 337.8 billion rubles ($4.81 billion) of OFZ Treasury bonds.

Russian banks have bought the vast majority of government debt, with sanctions blocking access for foreign investors, who have been attracted by Russia’s high revenues.

The dominant lender is Sberbank (SBER.MM) Anatoly Popov, deputy chairman of Sberbank’s executive board, told RIA news agency it plans to build up its liquidity buffer using variable coupon bonds. The bank holds more than 3 trillion rubles of OFZ bonds.

Russian stock indices were higher.

Dollar-denominated RTS index (.IRTS) Russia’s ruble-based MOEX rose 0.8% to 947.6 points, rebounding from its lowest level since Oct. 10. (.IMOEX) It was 0.5% higher at 2,125.9 points.

($1 = 70.2750 rubles)

Reporting by Alexandre Maru. Editing by Tom Hogg, Toby Chopra, and Barbara Lewis

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