Russian rouble firms past 80 vs euro, bonds up on rate cut expectations

The Russian rouble gained on Thursday, firming past a psychologically important level of 80 to the euro, while government bond prices climbed to a two-month high on expectations of an imminent rate cut. Trading on Moscow Exchange remains jittery and trading patterns are to some extent artificial due to capital control measures that Russia imposed in late February after sending tens of thousands of troops to Ukraine.

The Russian rouble gained on Thursday, firming past a psychologically important level of 80 to the euro, while government bond prices climbed to a two-month high on expectations of an imminent rate cut.

Trading on Moscow Exchange remains jittery and trading patterns are to some extent artificial due to capital control measures that Russia imposed in late February after sending tens of thousands of troops to Ukraine. The rouble gained 2.4% to 74.57 to the U.S. dollar by 1041 GMT, hovering near levels seen before Feb. 24.

Against the euro, the rouble also firmed more than 2.5% to 79.80, its strongest since April 8. The rouble is supported by record 3 trillion roubles ($38.4 billion) that companies are due to pay in taxes this month, according to analysts surveyed by Reuters. To make the payments, some export-focused firms need to sell foreign currency.

At the same time, demand for forex from importers remains insignificant and overall liquidity halved from levels seen before end-February, Alfa Bank's chief economist Natalia Orlova said. On the interbank market, the rouble was weaker at around 80 to the dollar, while banks' bids and offers to buy the euro stood at 84.60 and 90.07 roubles respectively.

Central Bank Governor Elvira Nabiullina said on Thursday she was aware that the rouble rate could deviate from the levels it was on Moscow Exchange, saying the bank was looking at adjusting forex control measures to address the issue. Nabiullina, who received support from Russia lawmakers that voted to reappoint her at the central bank head for a third term, also said the bank will consider cutting rates soon and gradually.

The latter supported rouble-denominated OFZ government bonds. Yields on 10-year benchmark OFZs fell to 9.85% , their lowest since Feb. 21, from around 11.6% seen last week. Yields move inversely with bond prices. Russian stock indexes were mixed.

The dollar-denominated RTS index rose 1.8% to 977.7 points, while the rouble-based MOEX Russian index was 0.5% lower at 2,318 points. For Russian equities guide see

For Russian treasury bonds see ($1 = 78.1250 roubles)