Falling oil prices drove the Russian rouble lower on Thursday, eating into gains made earlier in the week, but foreign-currency sales for tax purposes meant that losses could be reversed later in the session.

At 0735 GMT, the rouble was around 0.9 per cent weaker against the dollar at 62.15 and lost 1 per cent to trade at 70.99 versus the euro.

Brent crude oil was almost 2 per cent lower, moving towards $59 a barrel as fresh worries of oversupply gripped energy markets. Oil is one of Russia’s chief exports and hence is an important driver for all Russian assets.

Ceasefire in Ukraine

Investor attention was also pinned on east Ukraine, with hopes for a full ceasefire after the Ukrainian army pulled out of Debaltseve, an important railway hub that has seen the fiercest fighting between pro-Russian rebels and government forces in recent weeks.

Analysts said that exporters selling foreign currency were a further positive for the rouble.

“We think exporters could have increased the hard-currency selling offer ahead of taxes next week, because in February export was mostly on the sidelines in the FX market,’’ Maxim Korovin, a forex analyst at VTB Capital, said in a note.

Foreign-currency sales

Russian exporters convert a portion of their foreign-currency earnings to pay rouble-denominated taxes to the state budget near the end of each month, providing support to the rouble.

That support has increased after the government started monitoring forex sales of the country’s largest exporters to ease pressure on the national currency, which collapsed sharply in December, sparking panic on Russian financial markets.

Moscow-listed shares were mixed on Thursday, following gains in the previous session and reflecting moves in the rouble.

At 0735 GMT, the dollar-denominated RTS index was down 1.2 per cent to 917 points, while its rouble-based peer MICEX edged 0.1 per cent higher to 1,811 points.

Related Topics
comment COMMENT NOW