Russian Rouble jumps to six-week high amid rate hike anticipation

The Russian rouble soared to its strongest level in over six weeks on Wednesday, breaking through the 93-to-the-dollar mark. This bullish surge was attributed to heightened export activity converting foreign currency revenues and the anticipation of an impending interest rate hike later this week.

In what is typically a month-end ritual, tax payments prompted exporters to convert their foreign exchange (FX) earnings to meet domestic financial obligations. This practice has been further intensified by President Vladimir Putin’s recent decree, which mandates 43 groups of exporters to repatriate 80% of their foreign earnings and sell 90% of their FX revenues.

The rouble’s resurgence, which has seen it appreciate from beyond the 100-to-the-dollar threshold, is closely linked to this decree’s implementation.

As of 09:00 GMT, the rouble saw a 0.3% gain against the US dollar (USD/RUB), valuing it at 93.13, with its peak reaching 92.7350 – a level unseen since September 12. Against the euro, it marked an uptick of 0.3%, settling at 98.65, and it gained 0.3% against the yuan, resting at 12.70.

Promsvyazbank’s Yevgeny Loktyukhov pointed out, “The key driver of the recovery in the rouble’s position is the high supply of FX from exporters, who continue to actively implement the decree on FX revenue sales and are preparing for tax payments on Oct. 30.”

Moreover, the rouble’s rally is further bolstered by the prevailing expectations of another interest rate hike orchestrated by the central bank.