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. Last Updated: 07/27/2016

MICEX Launches New Forex Session




The Moscow Interbank Currency Exchange on Tuesday held the first trading session specially designed for exporters to sell their hard currency earnings, allowing the Central Bank to set a higher ruble rate than free trading would have permitted.


During the special morning session, in which exporters are now required to sell 50 percent of their foreign currency receipts, only banks with import contracts were allowed to buy dollars.


The fact that the ruble rate firmed slightly during Tuesday's session was entirely due to the Central Bank's measures to regulate the trading, market participants said.


The ruble was quoted at 15.75 rubles to the dollar during the hourlong session f compared with the 15.79 rubles-to-the dollar rate that the Central Bank had previously fixed for Tuesday.


In the afternoon trading session on MICEX, which lasts from noon until 4:30 p.m., banks are allowed to sell hard currency for their own needs. But a bank that wants to buy dollars can only do it to pay depositors, repatriate dividends to foreign holders of Russian equities, pay off foreign loans or help clients to honor import contracts. In Tuesday's afternoon session, there was a predictable shortage of dollars, and the average rate was 15.89 rubles to the dollar.


Traders said Tuesday's happenings on the MICEX confirmed their expectations that the Central Bank would use the two-session system to its advantage.


"The system is actually quite advantageous to the Central Bank because it can continue issuing rubles while replenishing its hard currency reserves," said Konstantin Svyatny, a currency dealer with commercial bank Rossiisky Kredit.


"It is getting additional dollars to back up its emissions," he said.


Exporters, who had expected the morning rate to be less favorable than the afternoon one, mostly stayed off MICEX on Tuesday, waiting to see just how big the difference would be.


Trading volume was low in the morning: Just $33.8 million changed hands.


According to traders, the ruble could have firmed more had there been more dollars on offer.


"The largely unchanged exchange rate can be explained by the fact that today's session was a trial session," MICEX chief analyst Venyamin Simonov said on Russian television.


"Exporters and importers need some time to adjust to the new system," he said.


Generally, exporters are unhappy about the introduction of the special sessions because they expect the dollar to be substantially cheaper in these sessions in the future than it would have been in free trading.


"This system will affect us adversely," Rem Vyakhirev, chairman of one of Russia's biggest exporters, the state natural gas monopoly Gazprom, told reporters at a news conference Tuesday.


Since on Tuesday exporters mostly decided to give the morning session a miss, the afternoon trading was comparable in volume to the special session's.


However, at $30.70, the afternoon trading volume was just one-fifth of Monday's turnover.


"The trading volume wasn't bad for the first day," said Igor Vasilyev, a currency trader at Alfa Bank.


"Many people who wanted to sell dollars probably sold them yesterday,: he said.


The Central Bank set the ruble's exchange rate at 15.80 to the dollar for Wednesday.