Russian rouble climbs to multi-week high vs dollar

Russia's rouble climbed to a more than seven-week high against the dollar on Friday, boosted by the state's new foreign currency interventions plan and higher oil prices after U.S. and British warplanes and ships struck across Yemen. Russia's finance ministry will switch to foreign currency sales from purchases in the coming weeks, it said on Thursday, after December oil and gas revenue was lower than expected.

Russia's rouble climbed to a more than seven-week high against the dollar on Friday, boosted by the state's new foreign currency interventions plan and higher oil prices after U.S. and British warplanes and ships struck across Yemen.

Russia's finance ministry will switch to foreign currency sales from purchases in the coming weeks, it said on Thursday, after December oil and gas revenue was lower than expected. The move is widely expected to buttress the currency. By 1138 GMT, the rouble was 0.5% stronger against the dollar at 88.16, earlier passing the 88 threshold for the first time since Nov. 23.

It firmed 0.5% to 96.64 versus the euro and was up 0.8% against the yuan at 12.22. Taking all state foreign exchange interventions into account, Russia is set to sell the equivalent of 16.7 billion roubles ($189.5 million) a day during the second half of January.

The plan should strengthen the rouble in the short-term, Dmitry Polevoy, investment director at Astra Asset Management, said. He expected the currency to fluctuate between 85 and 100 to the dollar over the course of 2024. The central bank's overly soft monetary policy in early 2023 is partly to blame for rouble depreciation and volatility last year, but the budget was the main culprit, he added.

A year-end spending jump pushed Russia's 2023 budget deficit to 1.9% of GDP, data showed

on Thursday. "Our baseline view is that there will no surprises from budget expenditure comparable to last year," Polevoy said.

Brent crude oil, a global benchmark for Russia's main export, was up 4.2% at $80.67 a barrel. Oil prices were rising after the United States and Britain said they launched strikes in Yemen in retaliation against Iran-backed Houthi forces for attacks on Red Sea shipping, a widening of regional conflict triggered by Israel's war in Gaza.

Russian stock indexes were higher. The dollar-denominated RTS index was up 0.9% at 1,141.6 points, its strongest since late November. The rouble-based MOEX Russian index was 0.4% higher at 3,194.4 points. ($1 = 88.1200 roubles)