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Rouble recovers, stocks soar as trade resumes after month-long hiatus

Randy Mancini 5 Mar 24
A view shows the headquarters of Moscow Exchange
FILE PHOTO: An interior view shows the headquarters of Moscow Exchange in Moscow, Russia April 27, 2021. REUTERS/Maxim Shemetov

March 24, 2022

(Reuters) -The Russian rouble extended its recovery on Thursday to hover close to 96 against the dollar, and the stock market rose in volatile trade after a month-long hiatus, helped by a ban on short selling and other support measures.

Russian markets are gradually reopening after the rouble sank to a record low and the central bank ordered the suspension of most trade after the West imposed unprecedented sanctions for what Russia calls “a special military operation” in Ukraine.

By 0908 GMT, the rouble had firmed 1.6% to 95.16 to the dollar, extending overnight gains driven by President Vladimir Putin’s statement Russia would start selling its gas to “unfriendly” countries in roubles.

Against the euro, the rouble was 2.2% higher at 105.66, away from an all-time low of 132.4 it hit in Moscow trading earlier in March, but far from levels of around 90 seen before Russia sent thousands of troops into Ukraine on Feb. 24.

On the stock market, volatility soared as the Moscow Exchange partly resumed trade for the first time since late February. A ban on trade with foreigners and a ban on short selling remain in place, artificially boosting equities.

“Large bids to buy Russian shares have been seen since the market opening,” BCS Brokerage said in a note. “The overall sentiment is supported by the confidence that the finance ministry will buy stocks.”

The finance ministry did not immediately respond to a request for comment.

The government said on March 1 it would channel up to 1 trillion roubles ($10.42 billion) from its rainy-day National Wealth Fund (NWF) to buying Russian stocks roiled by a massive sell-off last month.

“There were supposedly some large buy orders on the market in the morning from the companies on their buybacks and the NWF,” said Sova Capital analysts.

STOCKS REBOUND

The benchmark MOEX stock index climbed 7.6% on the day to 2,657.2 points, while trading of its dollar-denominated peer RTS remained suspended.

The trading apps of major brokerages with leading banks, including Sberbank, VTB, and Alfa, reported temporary issues with processing clients’ orders following increased interest in Russian stocks.

With most of European airspace closed to Russian planes, flagship carrier Aeroflot plunged around 20% at one point before cutting losses to 9%.

Shares in Russia’s second-largest lender VTB, which is subject to Western sanctions, were down 2.4% on the day.

But other stocks climbed, with some of them, such as gas producer Novatek rising nearly 22% on the day.

As Brent crude oil, a global benchmark for Russia’s main export, hovered near $123 per barrel, shares in gas giant Gazprom jumped around 16%, while oil majors Rosneft and Lukoil rose by more than 19% and 16%, respectively.

Shares in mining giant Nornickel also gained 16% and major lender Sberbank rose 7% on the day.

Russia resumed trading of OFZ treasury bonds on Monday with the central bank helping to stabilise the debt market with interventions, the amount of which it has not yet disclosed.

Yields of benchmark 10-year OFZ bonds, which move inversely to their prices, stood at 13.7% on Thursday after hitting an all-time high of 19.74% on Monday.

“We will do everything possible to open all segments of the stock market soon,” said Boris Blokhin, head of Moscow Exchange’s stock market department.

($1 = 96.0000 roubles)

(Reporting by Reuters; Editing by Christopher Cushing, Barbara Lewis and Emelia Sithole-Matarise)