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. Last Updated: 07/27/2016

Ruble Climbs, Trade Volume Stays Thin




The ruble recovered some of the previous day's losses Tuesday as the Central Bank supported it in the wake of the government sacking, dealers said.


"Compared to yesterday's [Monday's] trade, nothing special is going on. The Central Bank promised yesterday the exchange rate would be lower, everybody believed it and started selling [dollars]," a dealer at a big bank said.


The ruble climbed to an official 25.01 per dollar from 25.29 Monday, when the Central Bank intervened to smooth trade after Prime Minister Sergei Stepashin was fired.


The Friday morning average had been 24.55 per dollar, marking a 1 percent weakening for last week.


Based on the results of the morning unified trading session, the Central Bank set its official rate for Wednesday at 25.01 per dollar after a previous 25.29.


Dealers said the bank had softened its support, selling about $20 million in the morning session compared with $70 million offered Monday.


Some said the Central Bank was also buying dollars at low prices to replenish its resources.


Volume in the morning session, reflecting trade for same-day settlement on eight exchanges, was a thin $143.39 million.


Dealers said the Central Bank had enough reserves to support the ruble and would continue to do so for a few days, though many said it would be good to let it ease in line with inflation, which is now around 3 percent per month.


"The Central Bank will continue to support the ruble. It is easier to do now, since the markets have calmed down. But gradual ruble depreciation to the end of summer would be desirable," Andrei Abramov, economist at IBG NIKoil bank, said.


He said the Central Bank had enough resources to support the ruble, at least in the short term, given Russia's trade surplus and the requirement exporters sell 75 percent of hard currency revenues.


"[But] if there was a negative development, such as oil prices dropping, the Central Bank would not be prepared," Abramov said.


Alfa Bank currency trader Alexei Bukleyev said the ruble would hold at 25 per dollar for a few days with Central Bank support but would slide as low as 28 by mid-September.