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

A view shows Moscow Exchange office in Moscow
FILE PHOTO: A board with the logo is on display outside the office of the Moscow Exchange in the capital city of Moscow, Russia March 24, 2022. REUTERS/Maxim Shemetov

March 31, 2022

(Reuters) – The Russian rouble strengthened back past 84 to the dollar on Thursday, and stocks jumped 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 1002 GMT, the rouble was 1.5% stronger against the dollar at 83.30, close to a more than one-month high, and had gained 1.7% to trade at 92.59 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 sources told Reuters that 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 82 on Wednesday. The rouble was at 82 to the dollar on the EBS electronic platform.

STOCKS SURGE HIGHER

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

On Thursday, the bank told Reuters a ban on the buying and selling of any securities between Russians and foreigners of “unfriendly” countries, imposed on March 1, was indefinite.

Moscow Exchange said trading in foreign securities would be relaunched once transfers between Russia’s National Settlement Depository (NSD) and international clearing houses Euroclear and Clearstream, which are currently blocked, had been resolved.

“Foreign securities purchased by investors on the exchange are in safekeeping in the Russian jurisdiction,” Moscow Exchange said.

The dollar-denominated RTS index was up 5.3% at 999.7 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 5.2% higher, at 2,644.0 points.

Shares of energy giant Gazprom leapt 11.4%. Shares in sanctioned lender VTB were 9% higher, while flag carrier Aeroflot was losing 1.3% on the day.

SPB Exchange, Russia’s second-largest bourse, said it planned to resume trading in several securities of Russian companies with foreign primary listings, but not earlier than April 7.

Russia has spent 50.2 billion roubles ($613 million) in coupons on seven OFZ treasury bond issues, data on its website showed.

Yields on Russia’s benchmark 10-year OFZ treasury bonds, which move inversely to prices, fell to 11.46%, their lowest since Feb. 22.

($1 = 81.8750 roubles)

(Reporting by Reuters; editing by Clarence Fernandez and Jason Neely)