The rouble strengthened on Wednesday, supported by rising oil prices which also pushed Russia’s benchmark MOEX stock index to a record high, as the finance ministry held two OFZ treasury bond auctions. By 1401 Moscow Time, the rouble was 0.3% stronger against the dollar at 72.72 and had gained 0.2% to trade at 85.96 versus the euro.
According to Reuters, the Russian currency jumped to an 11-week high versus the greenback in the previous session after data showed a weaker-than-expected rise in U.S. inflation last month, before returning towards the 73 mark, with investors now looking ahead to the Federal Reserve’s Sept. 21-22 meeting.
“The better-than-expected CPI print in the U.S. lowers the chance that the Fed will cut its stimulus program next week, supporting the risk-trade,” said BCS Global Markets.
Weekly OFZ bond auctions may also support the rouble. OFZs, which Russia uses to plug budget holes, have regained popularity among foreign investors as concerns about sanctions have waned and on expectations their prices could rise higher once the central bank starts cutting rates at some point next year.
Brent crude oil, a global benchmark for Russia’s main export, was up 1.3% at $74.57 a barrel. Oil dynamics were a rare bright spot in the largely negative external outlook, analysts said, after weaker-than-expected Chinese economic data reinforced worries about slowing global growth.
“Although the oil market is looking strong, we fear a downturn in the momentum of oil prices and consequently weakening support for the rouble, due to the weakness of the general market environment,” Promsvyazbank analysts said in a note.
Russian stock indexes climbed. The rouble-based MOEX Russian index was 0.3% higher at 4,064.8 points, after touching an all-time high of 4,080.29 points. The dollar-denominated RTS index was up 0.4% to 1,761.3 points, earlier hitting 1,768.70 points, its strongest mark since August 2011.
In late July, for the first time since 2016, the Russian ruble entered the top 20 popular world currencies list with a 0.18% share in international settlements. The entry of the ruble into this rating was facilitated by its active promotion as a means of international settlements with Russia’s trading partners, experts say.