Russian rouble weakens ahead of Putin address to parliament

The rouble weakened on Tuesday despite increased demand for the currency ahead of month-end tax payments as President Vladimir Putin prepares to update Russia’s political and military elite on the Ukraine conflict.

At 0732 GMT the rouble was 0.7 per cent weaker against the dollar at 75.05 , edging closer to an almost 10-month low of 75.30 hit on Friday.

The Russian currency had lost 0.5 per cent to 80.04 versus the euro and was down 0.2 per cent against the yuan at 10.89.

Putin will address members of both houses of parliament on Tuesday, nearly a year since despatching tens of thousands of troops into Ukraine in a move that has triggered the biggest confrontation with the West since the depths of the Cold War.

The rouble is usually in greater demand before month-end taxes are due on Feb. 28, when exporters typically convert their foreign currency revenue.

“The weakening in the first half of February is to a large degree linked with psychological pessimism over the expectation of new sanctions,” said Andrei Kochetkov, lead analyst at Otkritie Research.

Nevertheless, oil prices remain high and the rouble should be supported by exporters in the final third of February, Kochetkov added.

EU members are expected to approve the 10th package of sanctions against Russia this week.

Brent crude oil , a global benchmark for Russia’s main export, was down 0.8 per cent at $83.4 a barrel while the country’s stock indexes were mixed.

“The minuscule turnover, despite market strength, suggests that investors are refraining from action until today’s speech by V. Putin, tomorrow’s parliamentary sessions and the announcement of new sanctions,” Sinara Investment Bank said.

The dollar-denominated RTS index (.IRTS) was down 0.1 per cent at 920.4 points. The rouble-based MOEX Russian index (.IMOEX) was up 0.4 per cent at 2,192.9 points.

Data released on Monday suggested that Russia’s economy contracted 2.1 per cent in 2022, a much lower decline than first feared.

Banks, have also proved resilient, with lenders now jostling for business from the state and the country’s big corporate players.