Rouble extends recovery gains, stocks up on 5th trading day (updated)

INTER RAO Lietuva AB

30/03/2022 13:04

(Adds analyst comment, updates prices)
    March 30 (Reuters) - The rouble firmed on Wednesday,
extending a recovery and heading towards levels seen before
Russia launched what it calls "a special operation" in Ukraine.
    Stocks inched higher on the fifth trading day after a
month-long hiatus.
    At 1147 GMT, the rouble was 2% higher at 83.50 against the
dollar  RUBUTSTN=MCX  and had touched 82.55 on the Moscow
Exchange, a level last seen on Feb. 25, the day after Russia
sent tens of thousands of troops into Ukraine.
    Against the euro, the rouble rose 2% to 92.30
 EURRUBTN=MCX , having briefly hit 90.73, its strongest since
Feb. 23.
    The rouble is now driven by export-focused companies that
are obliged to sell foreign currency as well as by month- and
quarter-end tax payments that boost demand for roubles, while
importers' activity is low, said Natalia Orlova, chief economist
at Alfa Bank.
    "This created an imbalance on the currency market as a
result of which foreign currency supply substantially exceeds
demand and thus leads to the firming of the (rouble) rate... I
see the current (rouble) rate strengthening as temporary," 
Orlova said.
    Dynamics driving the rouble lately are to some extent
artificial. The currency, which had been free-floating until
late February, is now steered by capital controls, a ban on
buying cash dollars and euros and other administrative measures.
    Sberbank CIB said the rouble could continue firming until
the central bank starts to ease capital controls.
    On the interbank market, the rouble traded at about 83
against the dollar  RUB= . Banks offered to sell euros at 91.25
roubles and buy at 95 roubles  EURRUB= .
    This week, the rouble received some support from the recent
round of Russia-Ukraine talks in Istanbul, where the Russian
delegation promised to scale down military operations around the
Ukrainian capital of Kyiv.
    The Russian currency is extending gains made last week after
President Vladimir Putin demanded that natural gas exported to
Europe or the United States be paid for in his country's
currency.
    European countries, which import about 40% of their gas from
Russia and pay mostly in euros, say state-controlled Russian gas
giant Gazprom  GAZP.MM  is not entitled to redraw contracts. The
G7 group of nations rejected Moscow's demands this week.
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    VOLATILE STOCKS
    Russian stocks have moved sharply and sometimes erratically
in the past few days, after the central bank allowed the market
to end a nearly month-long pause. 
    Trading hours on the stock market are shorter than in the
past and trading volumes are far lower than normal, and
non-residents are barred from selling stocks and OFZ rouble
bonds until April 1.
    London-listed internet firm VK, one of a few companies to
have flagged issues with servicing debt, saw its Moscow
depositary receipts rallying 27% at some point on Wednesday
 VKCODR.MM  after a 72.3% leap the day before. They ended the
day 9.7% higher.
    Shares in Russian state energy company Inter RAO  IRAO.MM 
jumped 25.5% after that firm recommended paying dividends.
 urn:newsml:reuters.com:*:nS8N2UR055
    The dollar-denominated RTS index  .IRTS  rose 7.7% to 949.23
points, and the rouble-based MOEX Russian index  .IMOEX  was
4.3% higher at 2,513.0 points.
    Flag carrier Aeroflot  AFLT.MM , one of the most volatile
securities since the reopening, jumped 24.7%. Oil major Rosneft
 ROSN.MM  was 4.6% higher and dominant state lender Sberbank
 SBER.MM  gained 4.5%.

 (Reporting by Reuters; Editing by Bradley Perrett and
Bernadette Baum)