Rouble soars vs dollar as market gauges impact of latest US sanctions

MOSCOW (Reuters) – The Russian rouble soared on Friday as the market gauged the impact of Washington’s latest sanctions against Moscow over the war in Ukraine, heading back towards a three-month high on the support of foreign currency sales and soaring interest rates.

The dollar’s weakening after U.S. job growth missed expectations in October also boosted the Russian currency.

By 1455 GMT, the rouble was 1% stronger against the dollar at 92.39, not too far from 91.6225, its strongest point since Aug. 1, hit on Wednesday.

It had gained 0.4% to trade at 98.88 versus the euro and firmed 0.5% against the yuan to 12.64.

The rouble has now lost support from month-end tax payments, which were due on Monday and usually see exporters convert foreign exchange revenues to pay domestic liabilities. But President Vladimir Putin’s decree on mandatory FX sales for some exporters is still buttressing the currency.

The rouble has strengthened from beyond 100 to the dollar since that decree was announced. The central bank’s higher-than-expected rate hike to 15% in late October has also helped.

The United States on Thursday imposed sweeping new measures against Moscow over the war in Ukraine, targeting Russia’s future energy capabilities, sanctions evasion, seven Russia-based banks and dozens of industrial firms.

The inclusion of more banks further narrows opportunities for foreign trade payments, may lead to a reduction in imports and could make it dangerous for exporters to keep foreign currency in foreign accounts, said Dmitry Polevoy, head of investment at Locko-Invest.

“Sanctions may play a stabilising role for the rouble, helping the central bank fight inflation,” Polevoy said. However, he warned, should the rouble strengthen significantly, it may affect budget revenues that have become more dependent on the exchange rate through energy revenues.

Brent crude oil, a global benchmark for Russia’s main export, was down 1.5% at $85.56 a barrel.

Russian stock indexes were higher.

The dollar-denominated RTS index was up 1.2% to 1,092.4 points. The rouble-based MOEX Russian index was 0.2% higher at 3,204.7 points.

Shares in mining giant Nornickel were down 0.8% on the day, having earlier surged to a more than 17-month high after its board recommended a nine-month dividend and approved a stock split to try and increase the investment case for its shares and reduce their volatility.

(Reporting by Reuters; Writing by Alexander Marrow; Editing by Jacqueline Wong)