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Rouble firms back past 84 to dollar, stocks gain with gas saga in focus

Randy Mancini 3 Mar 31
FILE PHOTO: Illustration shows a Russian rouble banknote and a descending and rising stock graph
FILE PHOTO: A Russian rouble banknote is seen in front of a descending and rising stock graph in this illustration taken March 1, 2022. REUTERS/Dado Ruvic/Illustration

March 31, 2022

(Reuters) – The Russian rouble strengthened back past 84 to the dollar on Thursday, and stocks edged higher as some curbs on short selling were lifted, with the market focused on what Moscow’s demand that its gas exports be paid for in roubles will mean.

By 0738 GMT, the rouble was 1.6% stronger against the dollar at 83.21 and had gained 1.4% to trade at 92.85 versus the euro.

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.

“Investors are waiting for the resolution of the situation with rouble payments for Russian gas, and also, probably, other goods,” Veles Capital analysts said in a note.

On Wednesday, two Reuters sources said 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.

Dynamics driving the rouble lately 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.

On the interbank market, rouble bids reached as strong as 75 against the dollar in the previous session and were hovering around 80 on Wednesday. The rouble was at 82 to the dollar on the EBS electronic platform.

Russian stock indexes were higher. The central bank lifted from Thursday a ban on some short selling, but limited it to shares in 83 enterprises and only to banks and brokers.

The dollar-denominated RTS index was up 3.6 at 983.5 points, at its highest since Feb. 24, the day Russia sent tens of thousands of troops into Ukraine.

The rouble-based MOEX Russian index was 3.4% higher, at 2,597.1 points.

Shares of energy giant Gazprom climbed 3.4%. Shares in sanctioned lender VTB were 7% higher, while flag carrier Aeroflot reversed early losses to gain 1.2% on the day.

(Reporting by Reuters; Editing by Clarence Fernandez)