(Reuters) – The Russian rouble got stronger on Monday, heading back toward the multi-year highs it hit against the dollar and the euro last week. This was helped by capital controls and the fact that the end of the month is tax time.
The rouble was 2.5 percent stronger against the dollar at 7:54 GMT, trading at 58.74.This was close to 57.0750, which was its best level since late March 2018.
It was trading at 61.38 against the euro, up 2.3%. This was close to its best level since June 2015, when it was at 59.02 on Friday.
Even though Russia is in the middle of a full-scale economic crisis, the rouble has strengthened against the dollar by about 30% this year. This makes it the strongest currency in the world, even though it was helped by controls put in place in late February to protect Russia’s financial sector after it sent tens of thousands of troops into Ukraine.
The rouble is being driven by export-focused companies that have to convert their foreign currency earnings because of Western sanctions that have frozen nearly half of Russia’s gold and foreign exchange reserves.
Analysts said last week that Russia’s requirement that buyers from other countries pay for gas in roubles has also helped the rouble rise in recent weeks.
BCS Express said in a note that the Russian currency is supported by exporters’ foreign currency, high oil prices, and the upcoming month-end tax period, when export-focused companies usually convert their foreign currency earnings into roubles to pay their local debts.
The daily Vedomosti said on Monday, citing sources, that the central bank had begun buying foreign currency to stop the rouble from rising too quickly.
The report was denied by the central bank, which said, “This information doesn’t match up with reality.”
Analysts at Promsvyazbank said that if the central bank did these kinds of things, the effect on the rouble rate would be more clear.
“However, such news could change how people act on the market and cause the rouble to fall in value.“
Russian stock indexes were not all the same.
The value of the RTS index in dollars went up by 2.2% to 1,277.2 points. At 2,364.3 points, the MOEX Russian index, which is based on the rouble, was down by 0.4%.