May 24, 2022 04:20AM ET
By: AnalysisWatch
The Russian rouble strengthened against the dollar on Tuesday to levels not seen since March 2018, driven by export-oriented companies selling foreign currency to pay taxes and shrugging off a slight loosening of capital controls.
The rouble has strengthened by around 30 per cent against the dollar this year, despite the economic crisis in Russia, which has made it the world's leading currency.
The rouble is driven by capital controls imposed in late February to protect Russia's financial sector after Moscow's decision to send tens of thousands of troops to Ukraine provoked unprecedented Western sanctions.
The rouble was 0.7% stronger against the dollar at 57.44, after rising to 56.61 on the Moscow Stock Exchange for the first time in more than four years.
Against the euro, the rouble gained 0.9 per cent to 59.57, hovering near seven-year highs.
The currency's strength raised concerns about the negative impact on Russian budget revenues from exports. On Monday, Russia reduced the percentage of foreign currency revenue that exporters must convert into roubles to 50% from 80%.
Despite the slight easing of capital controls, the rouble could fall to 55 against the dollar in the short term, said Dmitry Polevoy, head of investments at LockoInvest.
The rouble could return to levels of 60-65 against the dollar in June, Sinara Investment Bank said in a note.
The rouble has weakened at banks. Russia's largest bank, Sberbank, offered to sell dollars and euros for cash at 58.20 and 60.38 roubles respectively.
The dollar-denominated RTS index gave up 0.7% to 1,245.0 points. Russia's rouble-based MOEX index fell 0.1% to 2,276.7 points.