The Russian rouble strengthened on Monday, heading back towards multi-year highs hit against the dollar and euro last week, supported by capital controls and an upcoming month-end tax period.
At 0754 GMT, the rouble was 2.5% stronger against the dollar at 58.74 , not far from 57.0750, its strongest mark since late March 2018, hit on Friday.
It had gained 2.3% to trade at 61.38 versus the euro , nearing its strongest point since June 2015 of 59.02, also reached on Friday.
The rouble has firmed about 30% to the dollar this year despite a full-scale economic crisis in Russia, making it the world’s best-performing currency, albeit artificially supported by controls imposed in late February to shield Russia’s financial sector after it sent tens of thousands of troops into Ukraine.
The rouble is being driven by export-focused companies that are obliged to convert their foreign currency revenue after Western sanctions froze nearly half of Russia’s gold and forex reserves.
Russian demands that foreign buyers pay for gas in roubles has also contributed to the rouble’s recent rally, analysts said last week.
The supply of foreign currency from exporters, high oil prices and an upcoming month-end tax period that usually prompts export-focused companies to convert their forex revenues into roubles to meet local liabilities are all supporting the Russian currency, said BCS Express in a note.
The Vedomosti daily reported on Monday, citing sources, that the central bank had started purchasing foreign currency in order to stop the rouble’s uncontrolled strengthening.
The central bank denied the report, saying “this information does not correspond to reality.”
If the central bank were carrying out such interventions, the effect on the rouble rate would be more noticeable, said Promsvyazbank analysts.
“Nevertheless, such news could influence the behaviour of market participants and provoke a weakening of the rouble.”
Russian stock indexes were mixed.
The dollar-denominated RTS index was up 2.2% to 1,277.2 points. The rouble-based MOEX Russian index was 0.4% lower at 2,364.3 points.