Ruble Soars, Stocks Fall As Russia Holds Ukraine Referendums

-The Russian ruble soared to new multi-week highs on Friday, as stocks fell in volatile trade as Moscow mobilizes some 300,000 additional troops for the conflict in Ukraine.

Despite President Vladimir Putin’s mobilization order, the ruble hit its highest level against the US dollar and the euro since July in Moscow trading.

Around 1153 GMT the ruble strengthened 3.5% against the dollar to 56.79, its highest level since July 22. Against the euro, the Russian currency gained 4.4% to settle at 55.05 after firming above 55 at one point for the first time since July 4.

Currency controls and month-end tax payments, which see Russian exporters convert their foreign currency earnings into rubles to make payments to the Treasury, are giving the ruble a boost despite geopolitical headwinds, according to the analysts.

Increased supply of foreign currencies from exporters and reports of new sanctions against Moscow from the European Union, which make foreign currency investments less attractive, supported the ruble, SberCIB Investment Research said in a note. .

“Also, according to data published in the media on Russia’s fiscal parameters, there will be no return to fiscal rule and currency purchases related to it next year,” SberCIB said.

“Against this background, the risks of a weakening ruble have diminished,” said SberCIB analyst Yury Popov.

The finance ministry has raised oil and gas taxes and said it won’t return to its usual budget rule until 2025.

The fiscal rule dictates how much of Russia’s revenue from oil and gas exports is used for day-to-day government spending and how much is diverted to the government’s sovereign wealth fund. Designed to smooth out booms and busts, it was suspended earlier this year due to Russia’s new financial situation.

However, Russian stocks were deep in the red on Friday as markets remain nervous about how Russia’s mobilization campaign will affect the dispute. Dollar denominations RTS the index fell 0.9% to 1,163.3 points. The ruble MOEX The Russian index was 4.1% weaker at 2,100.4 points.

Russian stocks have seen increased volatility all week in response to the mobilization order and as Moscow holds referendums in four regions of Ukraine on joining Russia.

After surging in Thursday’s session on news it had enough free cash flow to pay interim dividends, Gazprom shares fell back in line with the broader market on Friday, down 2, 6% in rubles.

“Today the Russian market is dominated by negative sentiment… The Friday factor appears to be stronger than usual as market participants are unlikely to hold their long positions over the weekend,” Zarina said. Saidova, an analyst at Moscow-based investment firm Finam.

For the guide to Russian stocks, see

For Russian Treasury bonds, see

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