Title: Rouble firms past 79 vs dollar, stocks down

Apr 18, 2022 07:41AM ET

By: AnalysisWatch

The ruble briefly crossed the 79 level against the dollar on Monday, while stock indexes fell as the market failed to gain any new momentum and investors watched developments surrounding what Russia called a "special military operation" in Ukraine.

Ukraine's foreign minister said over the weekend that there had been no recent diplomatic communication between Russia and Ukraine at the level of their foreign ministries.

At 07:14 AM ET, the ruble had gained 1.1% against the dollar to 79.10 after briefly reaching 78.80, its highest level since April 12. Against the euro, the ruble gained 3.3% to 82.60, a level last reached on April 8.

Rosbank analysts expect the ruble to move in a range of 79-82 against the dollar and 84-87 against the euro this week.

The ruble's fluctuations are artificially limited by capital controls that Russia imposed in late February, as the country's financial sector and economy have been hit by unprecedented Western sanctions aimed at punishing Moscow for sending tens of thousands of troops to Ukraine on Feb. 24.

The ruble could come under some downward pressure from the central bank, which is expected to cut its key interest rate by another 17% at its next board meeting on April 29.

The governor of Russia's central bank, Elvira Nabiullina, said Monday that the bank would not try to tame inflation by any means, as that would prevent companies from adjusting to the new reality.

Russian authorities ordered export-oriented companies to convert 80% of their revenues into rubles in late February. This was part of the capital controls Moscow imposed as the ruble fell to record lows in the face of unprecedented Western sanctions.

This month, the ruble could be propped up by tax payments as companies have to pay a record 3 trillion rubles ($37.50 billion) in taxes, for which some export-oriented companies have to sell foreign currency, according to analysts polled by Reuters.