Ruble Strengthens on Demand from Local Tax Payments

The Russian rouble strengthened on Thursday, supported by local demand linked to month-end tax payments, as investors watched developments in Venezuela that could have repercussions on the Russian market, Reuters reported.

The Russian currency reached 65.91 versus the dollar for the first time since Nov. 23 but later pared gains and traded at 66.02 as of 0937 GMT, up 0.1 percent on the day, the report said.

Venezuela came into focus after its opposition leader, Juan Guaido, declared himself interim president on Wednesday, winning the backing of Washington and many Latin American nations. However, Russian officials condemned the move as illegal, raising concerns of more geopolitical tensions between Moscow and the West.

According to Kirill Tremasov, the head of research at Loko-Invest, if Moscow supports President Nicolas Maduro, who has led the oil-rich nation since 2013, it may give the U.S. Congress a reason to resume sanctions against Russia.

“Developments in Venezuela are certainly the key factor for markets in the coming days,” said Tremasov, a former head of the forecasting department at the economy ministry.

Russian stock indexes were mixed. The dollar-denominated RTS index was up 0.2 percent to 1,188.8 points. The rouble-based MOEX Russian index was 0.1 percent lower at 2,490.2 points.

High oil prices and month-end taxes that usually prompt export-focused companies to convert dollar revenues to meet local liabilities are continuing to support the ruble.

In the next few days, the Russian currency could strengthen to 65.70 to 65.80 against the dollar, said Artem Zvonarev, a trader at VTB Capital.

“Today exporters’ support can still be felt, but in the longer term the rouble’s dynamics and its direction will be more dependent on speculators and financial investors,” said Dmitry Polevoy, chief economist at Russian Direct Investment Fund (RDIF).