July 11, 2018 / 7:10 PM / 8 days ago

Looming Putin-Trump meeting boosts demand for roubles

MOSCOW - The rouble pared early losses on Wednesday, bolstered by hopes that Russian President Vladimir Putin and U.S. President Donald Trump could move towards easing tensions between the two countries when they meet next week.

A woman holds 200 and 2,000 rouble banknotes in a bank in Moscow, Russia November 21, 2017. REUTERS/Maxim Shemetov

That helped the rouble stabilise despite local bids for foreign currency during the season for corporate dividend payments.

The rouble hovered at 61.72 to the dollar as of 1434 GMT, away from its weakest point of 62.34 touched earlier on Wednesday.

When the two leaders meet on July 16, analysts expect Putin to try to negotiate with Trump on softening sanctions imposed by Washington over Moscow’s role in Ukraine and allegations of meddling in U.S. elections in 2016.

“For a few days we contemplate non-residents entering our market,” said Artem Zvonarev, a trader at VTB Capital, adding that foreign players were buying into the rouble and Russian OFZ treasury bonds.

A trader at a state-run bank in Moscow, who asked not to be named, said “foreigners were grabbing roubles and selling dollars” ahead of the Putin-Trump meeting, betting that the currently undervalued rouble would benefit after the two leaders meet next week.

On the flip side, the rouble’s gains are limited by Russia’s daily purchases of foreign currency for state reserves as well as by dividend payments that foreign investors in Russian companies convert into other currencies, the trader said.

Oil prices, Russia’s key export, were lower but remained far above levels factored into the 2018 budget.

Brent crude oil, a global benchmark for Russia’s main export, was down 2.3 percent at $77.06 a barrel, putting pressure on the stock market.

The dollar-denominated RTS index was down 0.9 percent at 1,192.03 points. Its rouble-based peer MOEX slipped 1.2 percent to 2,336.65 points, after briefly hitting an all-time high of 2,379.33 on Tuesday.

Reporting by Andrey Ostroukh and Vladimir Abramov; Editing by Susan Fenton

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