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. Last Updated: 07/27/2016

Ruble Continues to Rise as Dollar Gets Hammered

MOSCOW — The Russian ruble reached new 2009 highs against the dollar on Wednesday, propelled by the global frenzy of investors putting their cash into riskier currencies that promise higher and faster returns.

The ruble closed at 29.43 per dollar. It had firmed as far as 29.36 earlier in the session before giving back some of the gains as market participants cashed in.

Volatility defined the whole session in Moscow, with investors juggling between increasing their positions and cashing in on their gains.

Profit-taking, which on Tuesday brought the ruble down slightly, was still seen on Wednesday, despite crude prices rising to their 2009 high and further broad hammering of the dollar.

The ruble closed at 35.89 against the euro-dollar basket that the Central Bank introduced in 2005 to guiding the ruble's nominal exchange rate policy.

"We believe that the rally on the local market could continue given foreign investors' growing excitement towards the ruble and ruble interest rates," said Maxim Korovin, an analyst with the state-controlled VTB Bank in Moscow.

Based on NDF rates, investors' sentiment towards the currency in the medium term continues to rapidly improve. One-year NDF contracts showed the ruble at 31.43 rubles per dollar in 12 months, 40 kopecks stronger than they had pointed to on Tuesday .

The profit-taking by investors in recent days has given the Central Bank a respite from interventions. Dealers said the regulator's purchases have been minimal — near $100 million on Wednesday. Last week, the Central Bank bought between $4.5 billion and $5 billion, stemming the ruble's appreciation against the basket.

Sergei Romanchuk, a dealer with Moscow's Metalloinvestbank, said more serious interventions might be seen Thursday.

"I think tomorrow we will test the Central Bank's bid, providing there won't be large clients purchases [of foreign currencies]," Romanchuk said.