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. Last Updated: 07/27/2016

Analysts, Dealers Predict Stable Ruble Near 5,000

The ruble fell for the second day in a row against the dollar Thursday, closing 5 points down at 5,043, but analysts said the Central Bank would seek to keep the currency stable at around the 5,000 mark.

Following Central Bank intervention, the ruble rose to 5,023 from 5,046 earlier in the day on the over-the-counter interbank market.

"The Central Bank has to show the International Monetary Fund that the ruble is stabilizing to ensure Russia gets the next portion of the IMF [standby] loan," said one dealer. "It is not excluded that the ruble will drop by another 5 points tomorrow, but it's likely to start rising again soon and be stable through the summer at around 5,000 to the dollar."

The treasurer of one major bank said a temporary shortage of dollars was forcing the ruble downward, but the fall was unlikely to last.

"There is a shortage of dollars on the market and dollar loans are expensive, but this is a temporary phenomenon and the ruble is likely to stabilize again," he said. "Commercial banks are trying to depress the ruble, but their efforts will meet resistance from the Central Bank."

While demand for $67.6 million outstripped supply of $52.3 million at the daily dollar auction on the Moscow Interbank Currency Exchange (MICEX), trading volumes were low with turnover of only $62.6 million traded compared to over $400 million Tuesday.

The ruble had risen by around 1.5 percent against the dollar in the few days preceding its 12-point stumble Wednesday. Igor Doronin, a senior currency analyst at MICEX, said the ruble is now likely to continue its gradual decline.

"Equilibrium is restored on the financial market and if nothing crucial happens we will see the normal, gradual descending of the ruble," he said. "Much will depend on the inflation."

(Reuters, MT)