MOSCOW: The Russian ruble strengthened slightly against the dollar on Monday after the government lowered a mandatory foreign currency sales requirement on major exporters to 40 percent from 60 percent over the weekend. By 0753 GMT, the ruble was 0.7 percent higher at 87.30 against the dollar.
Sanctions on Moscow Exchange and its clearing agent, the National Clearing Centre (NCC), led to a range of varying prices and spreads as trading shifted to the over-the-counter (OTC) market on June 14, obscuring access to reliable pricing for the Russian currency. A requirement to sell 80 percent of foreign currency earnings was introduced to support the ruble in October 2023, and then reduced to 60 percent in June. The government made the announcement about the new cut on July 13.
The Russian central bank has said that compulsory forex sales have helped to calm volatility in the ruble market, allowing for controls to be relaxed. In its latest financial markets risk report for June the regulator said currency sales by exporters remained strong. Analysts have estimated that foreign currency sales are well above the government’s threshold, while the measure was likely to support the local stock market whose main index hit over two-year highs on May 20 but has been steadily declining since then.
"Lowering the threshold for the sale of foreign currency plays in favor of the stock market,” said Alexei Golovinov, chief analyst at Promsvyazbank, pointing out that avoiding excessive ruble strengthening is positive for exporters’ securities. The index was 0.4 percent lower on Monday. Shares in VTB Bank traded around 0.2 percent higher at 99.85 a piece as trading resumed after the lender conducted a reverse share split, which raised the value of each individual share by 5,000 times.
Against the yuan, which had already become the most traded foreign currency in Moscow before the latest sanctions were imposed, the ruble was unchanged at 11.97, according to an analysis of the OTC market. It was down 0.3 percent at 96.14 against the euro.
Brent crude oil, a global benchmark for Russia’s main export, was down 0.2 percent at $84.83 a barrel but generally held ground despite political uncertainty in the US and the Middle East. — Reuters