Russian rouble pares gains after hitting six-week high vs dollar

The Russian rouble hit its strongest level in almost six weeks against the dollar on Tuesday before paring some gains, buoyed by gradually increasing foreign currency sales by exporters and prospects that the central bank may hike rates again this week.

The Russian rouble hit its strongest level in almost six weeks against the dollar on Tuesday before paring some gains, buoyed by gradually increasing foreign currency sales by exporters and prospects that the central bank may hike rates again this week. By 0750 GMT, the rouble was 0.4% stronger against the dollar at 94.67, reaching 92.4450 in early trade, its strongest point since Aug. 2. After climbing more than 2% in the previous session, the rouble was still trading at its strongest since late August.

The rouble had gained 1% to trade at 101.49 versus the euro , earlier firming past 100 for the first time since late July, and had gained 0.6% against the yuan to 12.95 . The rouble pared early gains as President Vladimir Putin spoke in the far eastern city of Vladivostok, promising no sudden moves to limit rouble volatility, which he said was posing no difficulties for now.

Kremlin economic aide Maxim Oreshkin publicly called for tighter monetary policy as the rouble tumbled past 100 to the dollar last month, leading the central bank to raise rates by 350 basis points to 12% on Aug. 15 in an emergency meeting. Oreshkin, who on Monday said the rouble's worst days were behind it, continued his verbal interventions on Tuesday at an economic forum in Vladivostok.

"Fundamental factors, the balance of payments, steady budget fulfilment, very good budget forecasts and slowing lending all create preconditions for a stronger rouble in the coming months," Oreshkin said on RBC TV. The majority of analysts polled by Reuters on Monday now expect the central bank to raise rates again on Friday, a move that could lend further support to the rouble.

But top bankers on Tuesday said a hold at 12% may be preferable. "Given the current downward trend in the dollar rate, I think the central bank will refrain for now," news agencies quoted VTB Bank CEO Andrei Kostin as saying. "I think (the rate) will stay."

Sberbank CEO German Gref told reporters in Vladivostok that too little time had passed since last month's sharp hike and more time was needed to assess the result, agencies reported. Brent crude oil, a global benchmark for Russia's main export, was up 0.3% at $90.90 a barrel, helping Russian stocks rise.