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. Last Updated: 07/27/2016

Ruble Rally Forces Trading Band Shift

MTPeople walking past an exchange-rate board in Moscow on Friday. The ruble later gained to 39.68 against the euro.

The ruble pushed past the key level of 34 versus the euro-dollar basket, forcing the Central Bank to shift its floating trading band Friday for the 21st time since mid-February, dealers said.

The rally continued as oil traded in sight of recent multimonth peaks and also gained support from speculators betting on further gains and exporters converting part of their revenues into rubles to meet tax payments.

Foreign currency flows prompted the Central Bank to move its floating corridor to 33.95 to 36.95 rubles against the basket, from 34 to 37 previously, after buying about $700 million at the boundary — the 21st such step since mid-February, dealers said.

They said it had taken a substantial push by buyers to force the ruble past the 34 mark, seen as a key barrier on the currency's march higher.

"The market went beyond this level when the Central Bank had purchased its regular volume of interventions," said Mikhail Spolokhov, a dealer at MDM-Bank.

The Central Bank also continued small-scale interventions within the trading band, with a major domestic player estimating total interventions at about $800 million on Friday.

Finance Minister Alexei Kudrin conceded on Friday that the strong ruble worsens competitiveness of Russian business, but he argued against artificial limits to its appreciation.

Capital inflows continued for a fifth week, with Russia-focused equity funds receiving $253 million in the period to March 17, outshining Brazil and China, EPFR data showed.

Tax payments next week will also help the ruble, but support will be limited as ruble liquidity is close to its highest level since early January, analysts said.

The total tax payments in the coming week will be close to 200 billion rubles to 250 billion rubles ($6.8 billion to $8.5 billion), said Vladimir Bragin, an analyst at Trust bank.

Versus the dollar, the ruble was down 6 kopeks at 29.29, moving away from Wednesday's 3 1/2-month peak of 29.14. Against the euro, the ruble climbed to a fresh 15-month maximum of 39.68.