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  • Writer's pictureanalysiswatch

Title: Russian rouble jumps to 2-week high vs dollar, euro

Jun 09, 2022 07:41AM ET

By: AnalysisWatch

The Russian ruble rose to a two-week high on Thursday, strengthening 3 percent against the dollar and euro on the Moscow Exchange, helped by capital controls and high oil prices.

At 7:21 a.m. EDT, the ruble was trading 2.5 percent higher against the dollar at 57.95, having previously reached 57.4075, its highest level since May 25.

Against the euro, it rose 3.4% to a two-week high of 61.42.

The ruble has become the world's most dynamic currency this year as it has been under capital controls for more than three months since Moscow sent tens of thousands of soldiers into Ukraine on Feb. 24.

Rising oil prices are boosting the ruble, SberCIB Investment Research said in a note.

The ruble reacted weakly to Russia's decision this week to loosen some capital controls, including raising limits on cross-border transactions for individuals and allowing export-oriented companies to transfer foreign currency to their offshore accounts under certain conditions.

Now the focus is on the central bank, which will meet on interest rates on Friday. A rate cut could put some pressure on the ruble and support OFZ government bond prices.

Most analysts polled by Reuters expect the rate to be cut by 100 basis points to 10 percent as the bank seeks to make loans more affordable amid falling consumer demand and slowing inflation.

However, according to BCS Global Markets, a deeper rate cut to 9% is also possible, as the economic outlook and lower inflation give the central bank more room to maneuver.

Consumer inflation in Russia slowed to an annualized rate of 17.10 percent in May from 17.83 percent in April, the highest rate since January 2002, according to data released Wednesday.

The RTS dollar index rose 0.9 percent to 1,242.2 points. Russia's ruble MOEX index lost 1.4 percent to 2,285.9 points.

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