Russian rouble shrugs off lower oil on local taxes

MOSCOW: The Russian rouble overlooked weaker oil prices and continued firming versus its basket in early trade on Thursday thanks to companies converting their dollar and euro revenues to pay local taxes.

By 0650 GMT, the rouble inched up 3 kopecks to 34.28 against the euro-dollar basket, immersing deeper in the zone of the central bank's "so-called" planned interventions. Dealers say the regulator buys $150 million-$200 million a day in the range of 33.40 to 34.40 roubles per basket to absorb excessive inflows of foreign currencies.

However, such resistance looks not enough to offset the rouble's upward pressure. Ongoing month- and quarter-end domestic tax payments prompt Russian companies to convert their dollar and euro revenues to meet local liabilities, supporting the rouble. "It's the end of the month, plus oil prices are above $75. This may linger towards next Wednesday," said Roman Pakhomenko, a dealer at Lanta bank.

Bruised by worries about the global economy, the rouble's main benchmark, oil prices showed negative dynamics on Thursday although stood at levels of $75-$76, high enough to comfort rouble assets and ensure Russia's current account surplus.

Pricing in the broader euro weakness, the rouble rose 12 kopecks to 38.91 per euro, heading away from a three-month low of 39.63 hit in Monday. The short-term target for the euro/rouble pair is 38.85 and a break through would open a door for a fall to 38.60, technical analysts at Nettrader said in a note. Versus the dollar, the rouble gave up 6 kopecks to 30.51.

Investors' reluctance to increase positions on the summer-thinned market after several days of demand for relatively cheap dollars may also hamper the rouble's moves. "The market bought a lot in the last days so I don't expect a substantial rise in the basket," said Sergei Ponomaryov, a dealer at Promsvyazbank.