Jun 10, 2022 03:46AM ET
By: AnalysisWatch
The Russian rouble firmed on Friday, rebounding to a two-week high reached in the previous session on support from capital controls in anticipation of an expected interest rate cut by the central bank.
At 0724 GMT, the ruble was 1.1% higher against the dollar at 58.71, not far from 57.4075 on Thursday; it’s highest since May 25.
Against the euro, it raised 2.1% to 61.96, also a two-week high.
The central bank is expected to cut interest rates, which in theory could put some pressure on the rouble and support OFZ government bond prices.
The majority of analysts polled by Reuters expect the rate to be cut by 100 basis points to 10% as the bank tries to make lending more affordable in the face of sluggish consumer demand and a pause in inflation, although some think a bigger cut to 9% is possible.
The rate decision is expected at 1030 GMT, followed by a media briefing with Governor Elvira Nabiullina at 1200 GMT.
The central bank's decision is unlikely to affect the rouble exchange rate given the existing restrictions on capital movements, said Alexander Dzhioev, an analyst at Alfa Capital.
President Vladimir Putin signed a decree on Thursday that the market interpreted as a potential means for export-oriented companies to reduce foreign currency conversions.
Capital controls have forced exporters to convert 80% of their earnings into roubles after Russia sent tens of thousands of troops to Ukraine on 24 February. This ratio was later lowered to 50 % in May.
Russian stock indices performed unevenly.
The dollar-denominated RTS index rose 1.1 % to 1,226.7 points. The rouble-based Russian MOEX index was 0.4 % lower at 2,285.9 points.