Under $ 63 a ruble

The Russian ruble has stabilized below 63 against the dollar today, backed by capital controls as well as forthcoming tax payments that usually require additional foreign currency conversion into rubles to cover domestic liabilities.

According to Reuters, the ruble has become the currency with the best performance this year, despite the economic crisis going through the Russian economy, which is artificially supported by the controls imposed by Russia in late February to shield its financial sector, after sent tens of thousands of troops to Ukraine.

Shortly before 12, the ruble rose to 62.77 per dollar on the Moscow stock exchange, approaching levels not seen since the beginning of 2020. Against the euro, the ruble stabilized by 1.5% at 65.70.

Its upward trend is due to the requirement for exporting companies to convert 80% of their revenues into rubles, while the demand for dollars and euros is limited by capital controls and reduced imports due to the supply chain shutdown after sanctions. US and EU to Russia.

In the bond market, 10Z government bond yields fell to 10.28% from around 10.30% earlier this week.

Yields are expected to fall further, as the central bank is set to cut its key interest rate this year to support the economy as inflation slows thanks to the stabilization of the ruble.

The central bank is likely to cut its key interest rate by 100-200 basis points from 14% at its next board meeting in June, said Dmitry Polevoy, LockoInvest’s chief investment officer.

For the first time in several weeks, annual inflation slowed to 17.69% on May 13 from 17.77% a week earlier, while weekly inflation fell to 0.12%, well below 2, 22% observed in early March, a few days after Russia launched what it calls a “special military operation” in Ukraine.

The stock indices showed a mixed course. The RTS index (in dollars) rose 0.1% to 1,213.7 points. The Russian MOEX index (in rubles) loses 0.9% at 2,423.8 points.