Published by Jessica Weisman-Pitts
Posted on March 31, 2022
(Reuters) -The Russian rouble strengthened for a ninth straight session in Moscow, ending near 83 per dollar on Thursday, and stocks jumped higher as some curbs on short selling were lifted, with the market focused on the effects of Moscow’s demand that its gas exports be paid for in roubles.
The rouble ended 1.6% stronger against the dollar at 83.20, its strongest close since Feb. 25, and gained 1.8% to close at 92.50 versus the euro.
The currency lost nearly 40% of its value from the 2021 close as global curbs and sanctions kicked in in retaliation of Moscow’s invasion of Ukraine late last month.
Dynamics driving the rouble are to some extent artificial. The currency, which had been free-floating until late February, is now steered by capital controls, a ban on buying cash dollars and euros and other administrative measures.
In Moscow trading, the rouble has risen in 15 of the last 16 sessions.
The Russian currency is extending gains made last week after President Vladimir Putin demanded that natural gas exported to Europe be paid for in roubles, a move that has galvanised European countries into action.
Putin is demanding foreign buyers pay for Russian gas in roubles from Friday or else have their supplies cut.
“There’s not much chance of Europe directly paying in roubles,” said Christian Lawrence, senior market strategist at Rabobank.
“Putin has been quite clear that he needs roubles for that gas. So if it does happen, I think he goes via a third party. But we’ll have to wait and see how it pans out.”
On Wednesday, two sources told Reuters that Russia planned to keep the contract currency for gas exports to Europe unchanged but would seek final payment in roubles as one of the options to switch the currency of gas trade, moves that may ease some traders’ concerns.
Russia’s Gazprombank said on Thursday it would provide conditions to allow convenient payments for Russian gas in roubles, Tass news agency said.
On the interbank market, rouble bids reached as strong as 75 against the dollar in the previous session and were hovering around 79 on Thursday. The rouble was at 81 to the dollar on the EBS electronic platform, below levels last seen prior to the invasion.
STOCKS SURGE HIGHER
Russian stock indexes were higher. The central bank from Thursday lifted a ban on some short selling, but limited it to shares in 83 enterprises and only to banks and brokers.
On Thursday, the bank told Reuters a ban on the buying and selling of any securities between Russians and foreigners of “unfriendly” countries, imposed on March 1, was indefinite.
Moscow Exchange said trading in foreign securities would be relaunched once transfers between Russia’s National Settlement Depository (NSD) and international clearing houses Euroclear and Clearstream, which are currently blocked, had been resolved.
“Foreign securities purchased by investors on the exchange are in safekeeping in the Russian jurisdiction,” Moscow Exchange said.
The dollar-denominated RTS index was up 7.6% at 1,021.28 points, its highest close since Feb. 23, the day before Russia sent tens of thousands of troops into Ukraine.
The rouble-based MOEX Russian index rose 7.6% to 2,703.51 points.
Shares of energy giant Gazprom leapt 12.3%. Shares in sanctioned lender VTB were 15.4% higher.
SPB Exchange, Russia’s second-largest bourse, said it planned to resume trading in several securities of Russian companies with foreign primary listings, but not earlier than April 7.
Russia has spent 50.2 billion roubles ($613 million) in coupons on seven OFZ treasury bond issues, data on its website showed.
Yields on Russia’s benchmark 10-year OFZ treasury bonds, which move inversely to prices, fell to 11.1%, their lowest since Feb. 22.
(Reporting by Reuters; editing by Clarence Fernandez, Jason Neely and Sandra Maler)
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