Rouble recovers from near eight-month low vs dollar

The rouble recovered on Thursday after hitting its weakest mark since late April as the prospect of a favourable month-end tax period mitigated concerns over the impact of sanctions on Russian oil and gas.

By 1343 GMT, the rouble was up 0.4% against the dollar at 70.68 RUBUTSTN=MCX after earlier hitting 72.6325, its weakest since April 28, which had taken monthly losses to more than 15%.

It also pared losses to gain 0.5% to trade at 75.18 versus the euro EURRUBTN=MCX, having earlier slid past the 77 mark for the first time since late April, and recovered to gain 0.4% against the yuan to 10.04 CNYRUBTOM=MCX, up from a near seven-month low.

Should the rouble consolidate above the psychologically important levels of 70 per dollar, 75 to the euro and 10 per yuan, it could open up new downside horizons for the Russian currency, Veles Capital analysts said.

Falling export revenues in recent months have been exacerbated by a European Union oil embargo that began in December, when an oil price cap also took effect.

Brent crude oil LCOc1, a global benchmark for Russia’s main export, was up 0.6% at $82.7 a barrel. O/R

Analysts expect the rouble to find a foothold next week when month-end taxes, which usually see Russian exporters convert FX revenues to pay local liabilities, are due.

Russia has been borrowing heavily in the final quarter of the year, on Wednesday selling 337.8 billion roubles ($4.81 billion) of OFZ treasury bonds.

Russian banks have bought the vast majority of government debt, with sanctions preventing access for foreign investors, who had traditionally been attracted by Russia’s high yields.

Dominant lender Sberbank SBER.MM plans to build its liquidity buffer using bonds with floating-rate coupons, Anatoly Popov, deputy chairman of Sberbank’s executive board, told the RIA news agency. The bank holds more than 3 trillion roubles in OFZ bonds.

Russian stock indexes were higher.