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Rouble firms as government steps up verbal support

Published 19/12/2014, 09:07
© Reuters. Board showing currency exchange rates is on display in central Moscow
USD/RUB
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MOSCOW (Reuters) - Russia's rouble strengthened on Friday after Finance Minister Anton Siluanov confirmed his ministry had sold foreign currency and on expectations that exporters will step up dollar sales.

At 0815 GMT, the rouble was around 2.7 percent stronger against the dollar at 59.85 and gained 2.7 percent to trade at 73.65 versus the euro.

The rouble's recovery is in contrast to intense selling pressure earlier this week, when the rouble at one stage had fallen about 20 percent against the dollar on the day before rising again, threatening the relative financial stability on which President Vladimir Putin has built his popularity.

Analysts at Rosbank said that given what they saw as the central bank's conservative approach to rouble liquidity, the expansion of its forex repo mechanism and policy of preserving its reserves, the rouble could stabilise at around 60 to 62 roubles per dollar.

Russian government efforts to put pressure on exporters to not hoard their forex revenues are seen as another positive for the Russian currency, which is down some 45 percent against the U.S. currency this year.

The end-of-month tax period begins in earnest next week, when Russian exporters have to convert their overseas earnings into roubles to pay taxes to the state budget.

Siluanov said early on Friday that the rouble would definitely firm at the beginning of next year. His verbal interventions are seen as part of government efforts to talk up the Russian currency.

The central bank has spent over $80 billion defending the currency so far this year amid a collapse in oil prices and Western sanctions over Ukraine that have dented investors' appetite for Russian risk.

The bank has scaled back its support for the rouble since last month, however, when it floated the currency.

© Reuters. Board showing currency exchange rates is on display in central Moscow

(Reporting by Alexander Winning, Editing by Elizabeth Piper and Timothy Heritage)

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