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. Last Updated: 07/27/2016

Strengthening Ruble Rises to 24.16




The ruble on Friday firmed against the dollar to 24.16 in controlled morning trade on the Moscow Interbank Currency Exchange, and the government claimed that the ruble would keep climbing in coming days.


First Deputy Prime Minister Yury Maslyukov said he was "very happy" with the ruble's rise of 5 percent over the past two weeks. He said the stronger ruble would help Russia stick to its federal budget for 1999, which assumes a ruble-dollar rate of 21.5 to 1.


Central Bank chief Viktor Gerashchenko, also at the news conference, said that the ruble's dip to below 25 to the dollar this month was a result of inflationary worries and speculative pressure on the market.


But though the ruble rose in Friday morning trade at MICEX, it slid somewhat in the less tightly regulated afternoon trade.


Analysts differed on where the ruble would head next.


"Maslyukov said two months ago that the exchange rate should be 18 rubles to the dollar," said Mikhail Vasilyev of the securities department of Aljba Alliance bank. "Maybe it should, but it could also be 100 to the dollar. With the economy in stagnation, it is ridiculous to believe in the ruble's strengthening."


Vasilyev said the Central Bank had managed to prop up the ruble with administrative measures restricting its free trade f most recently by banning the use of Russian ruble bank accounts held by foreign banks to buy dollars.


Konstantin Svyatny, head of fixed income at Bank Rossiisky Kredit, said the government had reason to be optimistic f although he opined that a more realistic expectation would be a rate of 23 rubles to the dollar, not 21.


Svyatny said the ruble was climbing along with world oil and metals prices because those higher commodity prices are bringing in more export dollars.


At the same time, he said, imports have been somewhat replaced by domestic production, reducing the demand for dollars.


The Central Bank's reserves have increased while the ruble has been growing stronger, which means the Central Bank has not been spending hard currency on supporting the ruble, Svyatny said.