Rouble continues rally ahead of exporter tax payments

Oct 27th, 2009 | By | Category: Rouble News

The rouble's gains since the beginning of September surpassed ten per cent this week, about it as the currency set a 10-month high of 28.89 against the dollar.

Analysts have attributed the rouble's continuing rally to investors' enthusiasm about cashing in on high oil prices and demand from exporters looking to pay month-end taxes.

The central bank bought around $1.5 billion yesterday (26th October), moving its intervention bid first to 35.45 roubles versus a euro-dollar basket and then 35.40.

In a research note reported by Reuters, representatives for Barclays Capital noted that the rouble is "pushing steadily higher on rising oil prices", despite daily intervention by the central bank.

"At some stage this intervention will have created sizeable longs in the market, vulnerable to being stopped out, but we don't think we are at that stage yet," they continued.

Since initiating regular foreign currency purchases at 36.40 a month ago, the regulator has been shifting its bid level for each $700 million of interventions.

Petrocommerce Bank has estimated that some 185 billion roubles will be produced by firms seeking to pay month-end taxes this week, leaving the currency set to benefit even more.

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