The rouble fell strongly today, undoing some of the previous week’s gains, after Russia eased temporary capital controls aimed at preventing the currency from falling too far.
Rosbank, a Russian subsidiary of French bank Societe Generale, saw its stock rise 40% after SocGen announced it would exit Russia and incur a €3 billion (RM13.8 billion) loss on the sale of the bank to Interros Capital, a firm tied to Russian oligarch Vladimir Potanin. Read the entire story here.
The rouble has lost more than 4% of its value in choppy trade by 1500 GMT, falling to 79.45 against the dollar and 4.5 percent to 86.45 against the euro.
The rouble plummeted to 82.0950 versus the dollar during the trading session on the Moscow Exchange, down from 71 roubles on Friday, its highest level since November 11.
The central bank announced late Friday that from April 11, a 12% commission for buying foreign currency through brokerages will be eliminated, and a temporary prohibition on selling foreign exchange cash to individuals will be lifted.
The central bank sent a clear message to markets that further rouble strengthening was unwanted, according to Vladimir Evstifeev, a Zenit Bank analyst.
Alor Brokerage said the decision to eliminate the 12% commission on FX transactions means speculators would be free to trade again, adding that market participants were prone to locking up even minor profits.
Even though the central bank unexpectedly dropped its main rate from 20% to 17% last week, the rouble retains support from the mandatory conversion of 80% of FX revenues by export-focused enterprises, as well as high interest rates.
According to ITI Capital analysts, Russia receives around $1.4 billion in export revenues every day, and given Russian capital controls and dwindling imports, the rouble could strengthen even more.
Russian OFZ government bonds benefited from the central bank’s cut. The finance ministry said over the weekend that it will not borrow this year on the domestic or international debt markets.
Russia’s Finance Minister, Anton Siluanov, has stated that if the West attempted to compel it to default on its sovereign debt, Russia would take legal action.
Yields on 10-year OFZs, which move in the opposite direction of their prices, decreased to 10.45% today. That was the lowest level since February 21, three days before Russia launched a “special military operation” in Ukraine, resulting in unprecedented Western sanctions.
The dollar-denominated RTS index on the stock market.
The IRTS index, which is based on the Russian rouble, sank 5.8% to 1,017.4 points.
The IMOEX fell 1% to 2,566.6 points, with losses restrained by the rouble’s depreciation.
