Russian rouble leaps to near 7-year high vs euro

* Russia's rouble hits near 7-yr high vs euro

* Currency propped up by capital controls

* Hits 58.68 vs euro, gains over 4% vs dollar

May 23 (Reuters) - The Russian rouble firmed more than 6% against the euro on Monday to a near seven-year high, boosted by capital controls, strong oil prices and an upcoming month-end tax period.

By 1338 GMT, the rouble had gained 6.3% to trade at 58.75 versus the euro EURRUBTN=MCX , its strongest point since early June 2015.

It was 4.6% stronger against the dollar at 57.47 RUBUTSTN=MCX , not far from 57.0750, its strongest mark since late March 2018, hit on Friday.

The rouble has firmed about 30% against the dollar this year despite a full-scale economic crisis in Russia, making it the world's best-performing currency Link - albeit artificially supported by controls imposed in late February to shield Russia's financial sector after its decision to send tens of thousands of troops into Ukraine prompted unprecedented Western sanctions.

The rouble is being driven by export-focused companies that are obliged to convert their foreign currency revenue after the sanctions froze nearly half of Russia's gold and forex reserves.

While the central bank and government leave restrictions in place, the rouble could continue to strengthen further in the medium term, said Tinkoff Investments analysts.

"Closer to autumn, the exchange rate may start to stabilise nearer to the 60-65 level as imports recover and restrictions are potentially lifted."

Otkritie Bank analysts said the rouble may firm to 55 to the dollar within a month before weakening to 70-80 by year-end.

Russian demands that foreign buyers pay for gas in roubles has also contributed to the rouble's recent rally, analysts said last week.

The supply of foreign currency from exporters, high oil prices and an upcoming month-end tax period that usually prompts export-focused companies to convert their forex revenues into roubles to meet local liabilities are all supporting the Russian currency, said BCS Express in a note.


The Vedomosti daily reported on Monday, citing sources, that the central bank had started purchasing foreign currency in order to stop the rouble's uncontrolled strengthening.

The central bank denied the report, saying "this information does not correspond to reality".

If the central bank were carrying out such interventions, the effect on the rouble rate would be more noticeable, said Promsvyazbank analysts.

"Nevertheless, such news could influence the behaviour of market participants and provoke a weakening of the rouble."

Russian stock indexes were mixed.

The dollar-denominated RTS index .IRTS was up 2.2% to 1,266.8 points. The rouble-based MOEX Russian index .IMOEX was 2.6% lower at 2,311.2 points.
Reporting by Reuters Editing by William Maclean, Mark Potter and Toby Chopra

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.