Russian rouble firms as govt proposes capital controls extension

The government proposed extending the controls until the end of the year from their current expiration in April. The rouble is also being buttressed by state foreign currency sales and the prospect of month-end tax payments.

The rouble hit a one-week high against the dollar on Tuesday as the Russian government proposed extending capital controls that have buoyed the currency in recent months until the end of the year.

By 0812 GMT, the rouble was 0.1% stronger against the dollar at 87.73, earlier hitting its strongest point since Jan. 16. It was unchanged at 95.77 versus the euro and dipped 0.2% to 12.21 against the yuan.

The capital controls, ordered by President Vladimir Putin in an October decree, require exporters to convert foreign currency revenues into roubles. The rouble had traded past 100 to the dollar shortly before the decree was announced. The government proposed extending the controls until the end of the year from their current expiration in April.

The rouble is also being buttressed by state foreign currency sales and the prospect of month-end tax payments. State FX sales, carried out by the central bank, are set to amount to the equivalent of 16.7 billion roubles ($190.5 million) of foreign currency a day until the end of January. The finance ministry switched to making sales from purchases after December oil-and-gas revenue was lower than expected.

"The rouble is still continuing to receive support from huge FX interventions by the Bank of Russia and, traditionally for the start of the year, low demand for FX from importers, who need to sell off last year's stocks before making new purchases," said Alor Broker's Alexei Antonov in a note. Brent crude oil, a global benchmark for Russia's main export, was up 0.2% at $80.22 a barrel.

Russian stock indexes were higher. The dollar-denominated RTS index was up 0.3% to 1,140.9 points. The rouble-based MOEX Russian index was 0.2% higher at 3,177.1 points.

Shares in Russian technology company Yandex were 1.5% higher, outperforming the wider market, after Russian corporate filings revealed a change in the company's ownership structure, the next step on the firm's path to a restructuring that will see it spin off some international businesses from its main Russian assets. ($1 = 87.6550 roubles)