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Rouble hits one-month high vs dollar, Russian stocks regain ground

© Reuters. FILE PHOTO: A board with the logo is on display outside the office of the Moscow Exchange in the capital city of Moscow, Russia March 24, 2022. REUTERS/Maxim Shemetov

(Reuters) – The Russian rouble strengthened to a more than one-month high in Moscow trade on Tuesday, firming past 88 to the dollar, while stocks regained some ground in the fourth session since trading resumed after a near month-long suspension.

The Russian market is gradually reopening after a suspension caused by sweeping Western sanctions that followed the beginning of what Russia calls “a special operation” in Ukraine on Feb. 24.

By 0914 GMT, the rouble was up 2% against the dollar at 88.00, having earlier touched 87.40, its strongest since Feb. 28. It lost 0.3% to trade at 96.89 versus the euro after briefly clipping a one-month high.

In offshore trade, the rouble was marginally weaker, hovering at 89.75 to the dollar on the EBS electronic platform.

Two powerful drivers – Russia switching to roubles for gas export payments and exporting firms being mandated to convert 80% of their foreign currency earnings into roubles – are supporting the Russian currency, said Iskander Lutsko, chief investment strategist at ITI Capital.

“The market now really depends on progress in negotiations between Russia and Ukraine,” Lutsko said of the Russian stock market, as the two sides met for face-to-face talks in Turkey.

STOCKS RECOVER

Russian stocks are trading in curtailed sessions and with various restrictions, including a ban on short-selling. Non-residents are barred from selling stocks and OFZ rouble bonds until April 1. Trading volumes are far lower than normal.

The dollar-denominated RTS index was up 10.2% to 907.1 points. The rouble-based MOEX Russian index was 4.2% higher at 2,533.6 points.

Evgeny Suvorov, economist at CentroCredit Bank, said the entire capitalisation of the MOEX index is now about six times smaller than the market capitalisation of U.S. tech giant Apple (NASDAQ:AAPL).

Flag carrier Aeroflot, one of the most volatile securities since the reopening, jumped 12.7%. Oil major Rosneft was 9.8% higher and dominant state lender Sberbank was up 7.7%.

The Moscow-listed shares and depositary receipts of some companies with primary listings abroad returned to trading on Tuesday.

Nasdaq-listed tech giant Yandex saw its Moscow shares leap 8.1%, while depositary receipts in London-listed retailer Fix Price soared about 25%.

EUROBOND TEST

Russia’s finance ministry said on Tuesday it had fully paid a coupon on its Eurobond due in 2035, its third payout since unprecedented Western sanctions called Russia’s ability to service foreign currency debt into question.

Yields on Russia’s benchmark 10-year OFZ treasury bonds dropped to 13.36%, moving further away from last week’s record high of 19.74%, just below the central bank’s key interest rate but still at levels last seen in early 2015. Yields move inversely to prices.

Rouble hits one-month high vs dollar, Russian stocks regain ground

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