The Russian currency hit its strongest level since August against the euro and a two-week high against the dollar on Wednesday, supported by higher oil prices and foreign demand for the country’s treasury bonds, Reuters reported.
The ruble was stable against the dollar at 0720 GMT (65.59) after touching its strongest level since Feb. 27 (65.53). It traded at 74.01 versus the euro.
At two auctions on Wednesday, the ministry sold a cumulative 91.44 billion rubles worth (1.396 billion) of OFZ bonds, more than on any auction day in the past few years. Demand for OFZ government bonds is a gauge of market sentiment towards Russian assets.
Demand for such bonds is seen as a gauge of investors’ confidence in Russia, given the risk of U.S. sanctions against holdings of Russian debt remain.
The ruble’s appreciation in the past few days has been driven by growing demand for OFZ bonds, said Andrei Kochetkov, an analyst with Otkritie Brokerage.
The central bank said earlier this week that foreign investors had increased their holdings of OFZ bonds in February, and their demand had recovered to levels last seen in early 2018.
The ruble has outperformed most other emerging-market currencies this year, but analysts say its potential for further appreciation is stymied by external conditions and the Russian central bank, which increased daily FX buying on behalf of the finance ministry in March following a recovery in prices for oil, Russia’s key export.
On Wednesday, Brent crude oil, a global benchmark, was up 0.9 percent at $67.27 a barrel, supported by ongoing supply cuts by OPEC and U.S. sanctions against Venezuela and Iran.