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. Last Updated: 07/27/2016

Ruble Gains on Struggling Greenback

The ruble gained against the dollar for the second straight session Friday, and banks opted for short dollar positions in anticipation of further ruble gains, dealers said.

In the unified session of eight exchanges, used as the basis for the Central Bank's ruble/dollar rate for the next day, the ruble gained 4.93 kopeks to a weighted average of 31.83 to the dollar for settlement today from 31.88 on Thursday.

"The Central Bank's position that it would oppose further dollar gains and expectations that clients' dollar sales may intensify sparked the drop of dollar quotes despite good ruble liquidity," Irina Zujeva at Derzhava Bank said.

The Central Bank, which usually moves fast to curb what it considers excessive ruble volatility, was seen protecting the ruble at 31.89 at the very start of the year when it hit fresh lows against the greenback.

Dealers said dollar sales Friday stemmed largely from local firms that have to sell half of their export revenues on the local market. Some traders linked part of the extra dollar supply to Russia's largest privatization deal of 2002.

"There is a feeling that some of the dollar sales are related to the sale of Slavneft," Sergei Shchepilov at Raiffeisen said.

Two oil firms, Sibneft and TNK, joined forces last month to buy 75 percent of rival Slavneft for $1.86 billion. They have to pay for the state-owned stake in rubles by mid-February, dealers said.

"The market is already overloaded, and fresh dollar sales put more pressure on the market," Shchepilov said.

"The trend of [ruble appreciation] will go on as long as client sales continue, and it is hard to tell yet whether its gains will pause at 31.80 or the ruble will go higher over the next few sessions."

On the interbank market, another forum for foreign currency trade, rubles for Monday delivery were quoted at 31.820/31.828 at 2:50 p.m., also about 5 kopeks stronger compared to Thursday's close.