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Rouble edges lower as end of tax payments period approaches

Published 25/10/2022, 06:53 pm
© Reuters. A Russian one rouble coin is pictured in front of the Kremlin in Moscow, Russia, in this illustration picture taken June 24, 2022. REUTERS/Maxim Shemetov/Illustration
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MOSCOW (Reuters) - The Russian rouble edged marginally lower against the dollar on Tuesday, as the end of a favourable month-end tax payments period drew close, while investors awaited a central bank rate decision later this week.

At 0732 GMT, the rouble was 0.3% weaker against the dollar at 61.33 and had gained 0.4% to trade at 60.34 versus the euro. It had firmed 0.1% against the yuan to 8.32.

The rouble has been buttressed by a month-end tax period that usually sees export-focused firms convert foreign exchange revenues into roubles to pay domestic tax liabilities. Part of that support ends on Tuesday.

"Support for rouble positions is gradually decreasing due to the approaching end of tax payments," Promsvyazbank analysts said in a note.

The market is focusing on Friday's central bank rate decision, with a majority of analysts polled by Reuters expecting a hold at 7.5%.

"The Bank of Russia is likely to take a watchful attitude in order to gather all the data and assess options," said Alfa Capital portfolio manager Evgeny Zhornist.

The rate-cutting cycle may resume next year, as reduced business activity and confidence, a drop in Russia's GDP and a strong rouble all favour soft monetary policy, he added.

The central bank is due to publish data on households' inflationary expectations - an indicator it watches closely ahead of rate decisions - later on Tuesday.

Brent crude oil, a global benchmark for Russia's main export, was down 0.6% at $92.7 a barrel.

Russian stock indexes were fairly steady.

"Despite a good start to the week, it could be difficult for local indices to take another leg up without a significant driver amid weakness in oil and other commodities," said BCS Global Markets.

The dollar-denominated RTS index was down 0.3% to 1,059.9 points. The rouble-based MOEX Russian index was unchanged at 2,063.7.

© Reuters. A Russian one rouble coin is pictured in front of the Kremlin in Moscow, Russia, in this illustration picture taken June 24, 2022. REUTERS/Maxim Shemetov/Illustration

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