European aid deal strengthens rouble and Russian stocks

May 11th, 2010 | By | Category: Rouble News

Europe’s aid package for Greece saw the rouble gain the most in more than four months when trading opened on Tuesday after a public holiday.

The Russian currency rose 0.6 per cent against the euro to 38.6000. The movements left the rouble at 33.9686 against the central bank’s target currency basket, healing which is used to manage swings that could hurt Russian exporters.

The rouble remains within the 26 to 41 band the central bank pledged January 2009 to defend.

The International Monetary Fund warned, link however, that Russia may have to implement capital controls to defend the economy against excessive capital inflows.

“Managing capital inflows is one of the key challenges facing the Russian authorities,” the IMF said in a report published on its website.

“All lines of defense against excessive inflows – macroeconomic and prudential policies as well as capital controls – should be considered.”

The rouble's climb was matched by surges in Russian stocks, also attributed to the joint EU/IMF 750bn euro (£650bn) loan guarantee deal.

The 30-stock Micex Index added 3.3 percent to 1,330.72 as of 1:05pm in Moscow after climbing as much as 4.2 percent – its biggest intraday gain since 11 January.

Stocks rebounded after falling 10 percent last week on concern Europe’s deficit crisis will slow the world’s economic recovery, damping demand for oil, Russia’s key export earner.

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