Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Ruble Rises as New Rules Kick In

The ruble rose against the dollar again on Tuesday as the Central Bank abstained from intervention for a second straight session, but volume was thin as banks tested a new system of trading.

On Tuesday the Central Bank and the Moscow Interbank Currency Exchange turned the one-hour unified morning session of eight exchanges across the country into a full-day session and started trading dollars for next-day delivery.

"The new system is probably more convenient for banks' clients, who now can put their orders to sell export revenues throughout the day rather than banks which could previously implement those orders in one hour," a dealer with a large bank said.

The Central Bank, which holds a tight grip on the foreign exchange market, also started to use a new system for setting its official ruble/dollar rate, by using a weighted average of next-day delivery quotes.

Previously the Central Bank used the ruble's weighted average from the unified trading session for today delivery as a basis for its official ruble/dollar rate the next day.

"Changes in the setting of the official exchange rate will make the official exchange rate more representative and more market determined," said Olga Chebotaryova, an analyst at ING Bank.

She noted that the new system would eliminate banks' ability to raise rubles by selling dollars to the Central Bank in the day of trading and should result in higher demand for currency swaps and other refinancing instruments.

The currency extended its gains in early trade to a weighted average for today settlement of 31.1895 to the dollar from 31.2345 on Monday when it rose 5.04 kopeks after the Central Bank stopped buying dollars.

The bank has been buying extra oil dollars at 31.28 since the beginning of the month to curb the ruble's strength, which stems from Russia's strong balance of payments. Dealers said they saw no Central Bank bid on Tuesday.

Dealers said that local exporters -- oil and gas firms among them -- were seen selling dollars to raise rubles to meet their mid-month tax liabilities and had pushed the local currency higher.

Dollars for tomorrow delivery were traded at 31.19 by 3:20 p.m. in the unified trading session and were quoted at 31.1835/31.1915 on the interbank market, another floor for hard currency trade.