The ruble tends to rise ahead of the EPP, but the external environment prevents full growth

MOSCOW, May 25 (Reuters) – The ruble showed mostly positive momentum on Thursday given support for looming tax payments, but the external environment, which turned purely negative in the evening, is preventing full growth.

At the same time, the picture blurs the local currency demand, which may increase at the end of the session in order to minimize overnight risk, and at the end of the trading session, exporters, in turn, limit the supply of foreign currency sales.

At 17.30 Moscow time, the dollar/ruble pair was close to 80.10 in tomorrow’s calculations, with the ruble gaining less than 0.1%, while it rose to 79.74 in the afternoon.

The euro/ruble exchange rate is 86.00, and here the ruble is gaining 0.4%, having previously risen to 85.70.

Combined with the yuan, the ruble also lost yesterday’s intraday advantage, now trading close to 11.32, and earlier today the Russian currency reached its high here since mid-May, 11.25.

On the ruble’s side is the factor of the upcoming single tax payment next Monday – commodity corporations may increase the sale of export earnings in the domestic market in order to settle the ruble with the budget.

“The tax period factor currently supports the ruble’s position. This is local support, which will lose its strength by the end of the week,” said Vladislav Silaev of Alfa Capital.

The opposite of the ruble are local flows of foreign currency purchases, currently shaped mainly by Russian importers due to the redirection of supplies from the west to the east and the emergence of new trade patterns, as well as by local investors buying the business of Western companies leaving the Russian Federation.

Significant support for the ruble was oil, which jumped to highs from May 2, Brent to USD 78.66, thanks to the support of data on the decline in crude oil and petroleum products inventories in the United States and hints from the Saudi Arabian energy minister about the possibility of further production cuts by countries OPEC+.

Today, however, the base quotations are clearly cheaper, as in the case of the strengthening dollar, but also largely after the statements of the Russian Deputy Prime Minister Alexander Nowak, who does not expect changes in the OPEC+ agreement after the cartel meeting in early June.

A barrel of Brent is now 2.7% cheaper at $76.28.

In the forex market, the US currency updated to multi-week highs on Thursday: the dollar index hit 104.27 for the first time since March 17, combined with the euro reached USD 1.0706 for the first time since March 20, current trading is not far off and the exchange rate the dollar gained more than a quarter of a percent since the beginning of the day.

The dollar reached new highs thanks to today’s US statistics, which showed that GDP growth and the core consumer spending index for Q1 were stronger than expected, and the number of jobless claims last week was lower than expected. Good macroeconomic indicators in the US, combined with inflationary pressure, increase the chances of further interest rate hikes by the Fed.

Demand for the dollar, although already a safe asset, is also fueled by concerns about the possibility of a technical default by the US government over the unresolved issue of raising the US government debt ceiling, which at the same time puts pressure on commodities and emerging markets currencies. (Moscow office)