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Rouble Firms Against Euro Because of Tax Deadlines

The Russian rouble continues its recovery against the euro and dollar, which analysts say is due to EU nations getting ready to pay Russia for gas as well as capital retaliation implemented by Moscow.

Russia says that half of Gazprom’s 54 customers have opened accounts with them, and many European firms are entering near deadlines for their gas supplies. 

Opening those accounts is attainable following EU executives enabling member states to continue purchasing Russian gas without violating multiple sanctions they have jointly implemented against Russia for what Moscow describes as its “special military operation” in Ukraine that began on February 24. 

Yuri Popov, a strategist at SberCIB Investment Research, a hub of Russia’s No. 1 lender Sberbank, says that one of the critical grounds for the rouble upturn is the shift to roubles from euros that will occur in European payments for Russian gas.

The rouble’s value against the euro reached an all-time high this week, spiking over 5% in volatile trade from 59.02. 

Meanwhile, against the dollar, it firmed over 4% on the day to 59.10 after touching 57.0750, a strong level not experienced since March 2018. 

The rouble had soared about 30% to the dollar this year, even with a full-fledged economic decline in Russia, becoming one of the best-performing currencies. Although unnaturally backed by retaliations implemented in late February to protect its financial state following the attack on Ukraine.

The rouble’s rise is intriguing because it comes when many countries are experiencing economic difficulties. While some of these problems have been caused by external factors like Western sanctions, its rise is a result of export-focused firms responsible for converting their foreign currency profit. 

“Exporters are forced to sell (foreign currency), and there is no one to buy it,” said a trader at an investment firm in Moscow. 

The Russian rouble has seen increased demand as people stock up on goods due to tax season. Still, dollars and euros remain low because of the recent import restrictions and ban on pulling out foreign currency from bank accounts and transferring it outside Russia. 

“The key question is whether the central bank will step in as the excessive rouble firming is not in the finance ministry’s and budget plans,” said an analyst at CentroCreditBank, Evgeny Suvorov. 

On Friday, the head of the central bank’s monetary policy department, Kirill Tremasov, said the rouble continues to be a free-floating currency, according to the RIA news network. 

The central bank has not given any sentiment on the rouble rate.