Ruble hits near 2-year high against euro

Russia urges allies to dump dollar and euro in trade

Russian currency strengthens further ahead of record-high tax payments due this week

The Russian ruble strengthened against both the euro and the US dollar on Tuesday, trading data from the Moscow Exchange shows.

As of 10:07 GMT the Russian currency had jumped roughly 0.96% compared to the end of the previous day’s trading to 76.42 rubles against the euro, its highest in nearly two years, and gained around 0.92% against the greenback to trade at 72.45 per dollar, reaching a five-month high.

The rally comes as the market expects companies to make a record 3 trillion rubles ($40.25 billion) worth of tax payments due this week. Analysts say the tax boost may propel the Russian currency further, as some export-oriented firms will have to sell foreign currency to make the payments.

Market players also anticipate the rate decision due from the Russian central bank on Friday.

The key interest rate was hiked to 20% last month to tackle the impact of sanctions placed on the country by a number of Western states in retaliation for the launch of a military operation in Ukraine. Earlier this month, however, the Bank of Russia cut the rate to 17% as the economy stabilized, and some analysts expect it to be lowered further to 15% on Friday. This could cause the ruble rally to subside, experts say.

However, the Bank of Russia on Monday announced it would cut the time frame it uses to calculate the official exchange rate by one hour. According to Sberbank CIB analysts, this move suggests an improvement in the liquidity situation on the foreign exchange market.

Meanwhile, Russian stock indexes also saw gains on Tuesday. As of 10:05 Moscow time, the dollar-denominated RTS index was up 2.12% at 961.75 points. The ruble-based MOEX index was up 1.16% at 2,210.95 points.

For more stories on economy & finance visit RT’s business section

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