June 29, 2022
European Union leaders agreed in principle on Monday to cut 90 percent of oil imports from Russia by year-end and on other sanctions, such as

Ruble firms toward 61 vs dollar despite EU sanctions

The Russian ruble reversed earlier losses and firmed toward 61 against the dollar in volatile trade on Tuesday as capital controls helped to offset downside pressure from concerns about new European sanctions against Moscow.

European Union leaders agreed in principle on Monday to cut 90 percent of oil imports from Russia by year-end and on other sanctions, such as cutting Sberbank from the SWIFT transaction network, to punish Moscow for its intervention in Ukraine.

At 0949 GMT, the ruble was 1.6 percent stronger against the dollar at 61.23, heading away from the session low of 63.46. Last Wednesday it hit 55.80 to the dollar, its strongest since February 2018, before falling to 66.70 by the end of the week.

“It looks like the local currency should be able to gain a foothold around 60 by the end of the day,” Sberbank CIB said in a note.

 

Cash dollars in Russia remained notably more expensive than on the Moscow Exchange. Russia’s second-largest lender VTB offered to sell the US currency for 84 rubles.

Against the euro, the ruble gained 3.4 percent to 62.10, having last Wednesday hit a seven-year high of 57.10, at the peak of month-end tax payments that usually prompt export-focused companies to convert foreign currency to meet liabilities.

Boosted by capital controls, the ruble had risen to become the world’s best-performing currency so far this year until last week’s slide. New gas payment terms for EU consumers that require conversion of foreign currency into rubles and a fall in imports have also supported the ruble.

Russian stock indexes were mixed.

The dollar-denominated RTS index was flat at 1,215.6 points. The ruble-based MOEX Russian index shed 1.5 percent to 2,363.9 points.

Shares in Sberbank, Russia’s No.1 lender, slightly underperformed the broader market and fell 1.9 percent on the day after the EU agreement on new sanctions. The bank said the move to cut it from the SWIFT messaging system would not affect its operations.