Ruble Stabilizes Near 60 Against Dollar, X5 Stocks Outperform Broad Market Business & Finance

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MOSCOW – The Russian ruble stabilized near the 60 mark against the dollar on Tuesday, losing momentum after a short-lived rally, as stock indices fell on lower oil prices and the uncertainty linked to the return of foreign investors.

As of 0754 GMT, the ruble was flat at 60.23 against the dollar, trading away from a seven-year high at 50.01 reached in late June.

The ruble is expected to trade between 58.5 and 62 to the dollar on Tuesday, Promsvyazbank said in a note.

Against the euro, the ruble gained 0.8% to 61.34.

Still, the ruble is the best-performing currency so far this year, as it received an artificial boost from capital controls imposed by Russia after tens of thousands of troops were sent to Ukraine on Feb. 24.

The strong ruble has helped limit nascent inflation, but is hurting fiscal revenues and export-oriented businesses that rely on selling raw materials overseas.

The latter has raised concerns among Russian officials and businesspeople and heightened the need to reinstate a fiscal rule that caps Russia’s budget spending and diverts excess oil revenue to its rainy day fund.

The parameters of the new fiscal rule are expected to be released soon and the central bank expects the rule to be in place from 2023.

“The fall of the ruble is inevitable due to the probable announcement of the parameters of the renewed fiscal rule,” said Iskaner Lutsko, chief investment strategist at ITI Capital.

In the stock market, benchmarks were down, preparing for the return of foreign investors from countries that did not impose sanctions on Russia from August 8.

Russia banned all foreign investors from accessing its stock market days after Feb. 24, making domestic retail investors the driving force behind the market.

“Today, Russian market consolidation may continue amid uncertainty surrounding the admission of non-residents from ‘friendly’ jurisdictions into the Russian market,” said Yulia Goldina, equity strategist at BCS Global Markets.

The dollar-denominated RTS index fell 1% to 1,127.1 points, while its ruble counterpart MOEX lost 1.2% to 2,154.4 points.

The X5 group, Russia’s leading food retailer, outperformed the wider market with a 1.5% increase in its certificates of deposit on the Moscow Stock Exchange. The company said it plans to resume investing to grow and expand its business after a 79.4% jump in net profit in the second quarter.

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