Rouble surges, shares fall as Russia holds Ukraine referendums

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The Russian rouble surged to new multi-week highs on Friday whereas shares fell in risky commerce as Moscow mobilizes some 300,000 additional troops for the battle in Ukraine.

Regardless of President Vladimir Putin’s mobilization order, the rouble hit its highest stage versus the U.S. greenback and euro since July in buying and selling in Moscow.

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By 1153 GMT the rouble was 3.5% stronger towards the greenback at 56.79, its strongest stage since July 22. Towards the euro, the Russian foreign money had gained 4.4% to face at 55.05 after having firmed previous 55 at one level for the primary time since July 4.

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Foreign money controls and month-end tax funds, which see Russia’s exporters convert their overseas foreign money earnings into roubles to make funds to the treasury, are offering a lift to the rouble regardless of geopolitical headwinds, analysts say.

The elevated provide of overseas foreign money from exporters and studies of extra sanctions towards Moscow from the European Union, which make overseas foreign money investments much less engaging, have been supporting the rouble, mentioned SberCIB Funding Analysis in a word.

“Furthermore, in keeping with knowledge revealed within the media on Russia’s funds parameters, there might be no return to the funds rule and overseas foreign money purchases linked to this subsequent yr,” SberCIB mentioned.

“In reference to this, dangers of the rouble weakening have decreased,” SberCIB analyst Yury Popov mentioned.

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The finance ministry hiked taxes on oil and fuel and mentioned it will not return to its normal funds rule till 2025.

The funds rule dictates how a lot of Russia’s revenues from oil and fuel exports are used for day-to-day authorities spending and the way a lot is diverted into the federal government’s sovereign wealth fund. Designed to easy boom-and-bust intervals, it was suspended earlier this yr on account of Russia’s new monetary state of affairs.

Nevertheless, Russian shares have been deep within the pink on Friday as markets stay jittery over how Russia’s mobilization drive will have an effect on the battle. The dollar-denominated RTS index dropped 0.9% to 1,163.3 factors. The rouble-based MOEX Russian index was 4.1% weaker at 2,100.4 factors.

Russian shares have seen heightened volatility all week in response to the mobilization order and as Moscow phases referendums in 4 areas of Ukraine on becoming a member of Russia.

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After surging in Thursday’s session on information it had sufficient free money stream to pay interim dividends, shares in Gazprom fell again consistent with the broader market on Friday, down 2.6% in rouble phrases.

“Immediately the Russian market is dominated by damaging sentiment … The Friday issue appears to be stronger than normal as market gamers should not risking retaining their lengthy positions over the weekend,” mentioned Zarina Saidova, an analyst at Moscow-based Finam funding agency.

For Russian equities information see

For Russian treasury bonds see (Reporting by Jake Cordell and Alexander Marrow. Modifying by Alexander Smith, Kirsten Donovan and Gareth Jones)

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