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Russian rouble hits more than 2-year high vs euro before steadying near 77 -Breaking


© Reuters. This illustration was taken on April 7, 2022. It shows Euro and Russian coins. REUTERS/Dado Ruvic/Illustration

(Reuters] – On Tuesday, the Russian rouble hit a two-year-high against the euro. However, it stabilized near Monday’s close. It is a week in which tax payments support the currency. Investors are also looking forward to a rate cut Friday.

After earlier reaching 75.95 at 8:17 GMT, 0.3% had been gained by the rouble to trade at 76.190 against the euro. This was its best mark since February 2020. The rouble was 0.1% higher against the dollar at 73.2.

The trading activity is still subdued, and perhaps a little erratic when compared to levels before February 24, when Moscow sent thousands of troops into Ukraine.

Capital controls enforced by the central banks limit movement in the rouble. This means that the economy risks soaring inflation and capital flight as well as a potential debt default.

Promsvyazbank analyst said Russian companies that will be paying income tax this Thursday, should provide additional support to the rouble for this week.

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However, the Russian mineral extraction tax payment period ended Monday. That could reduce the upside of the rouble. According to analyst estimates, April’s payments could have broken a new mark.

According to Sberbank CIB, “During this week foreign currency exports by exporters could literally end after a recent easing currency controls and the rouble will likely come under pressure.”

Markets are also anticipating Friday’s rate announcement. According to Reuters, the central bank will cut its key rate by 200 basis point to 15% in an attempt to increase lending and stimulate the economy against high inflation.

Low rates not only support the economy by allowing for more lending, but also encourage inflation and render the rouble vulnerable to shocks from the outside.

Russian stock indexes are on the rise.

RTS, a dollar-denominated index, was up 3.3% to 969.6 point. With 2,247.9 point, the MOEX Russian Index was 2.8% lower.

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