Tuesday, September 26

Rouble firms as Russia sets out modest September borrowing plan

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MOSCOW — The Russian rouble reversed early losses to strengthen against the dollar on Monday as non-resident “friendly” investors returned to stocks trading and the finance ministry set out its borrowing plan for September after a seven-month pause.

Russia suspended weekly auctions of OFZ treasury bonds, which it uses to plug budget holes, in February, weeks before it started what it calls a “special military operation” in Ukraine, which triggered unprecedented Western sanctions against Moscow.

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Deputy Finance Minister Timur Maksimov said last week the ministry would prefer to place bonds with a long-term tenor and aim for a maturity length that does not overload its repayment schedule.

The ministry said auctions would take place on Sept. 14, 21 and 28, with three quarters of the papers issued having a 5-10 year maturity.

By 1319 GMT, the rouble was 0.7% stronger against the dollar at 60.18, its strongest since Sept. 1, paring early losses after Moscow Exchange resumed its early morning FX session for the first time since late February

It had gained 0.2% to trade at 60.82 versus the euro .

Promsvyazbank analysts said they expected the rouble to continue trading within a 60 to 61 target range against the greenback on Monday.

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Moscow Exchange will resume evening trading on its stock market from Monday and also welcomed back non-residents from what Russia deems friendly countries – those which have not imposed sanctions on Moscow.

Russia’s largest bourse is gradually widening its offering, seeking to return some sense of normalcy to Russian financial markets after severe disruptions in February and March as Western sanctions over Russia’s actions in Ukraine began to bite.

Russian stock indexes climbed as non-residents returned.

“Most likely, this will have a neutral effect on the Russian market, since a significant part of the securities is still banned for non-residents,” BCS Global Markets said in a note.

The dollar-denominated RTS index was up 1.9% at 1,265.9 points. The rouble-based MOEX Russian index was 1.3% higher at 2,456.7 points.

Currency markets opened at 0350 GMT. The Moscow Exchange’s evening session on its stock market will run until 2050 GMT.

Investors are also looking ahead to Friday’s key interest rate decision, with a majority of analysts polled by Reuters expecting a 50-basis-point cut to 7.5%. (Reporting by Alexander Marrow; Editing by Kirsten Donovan and Bernadette Baum)