MOSCOW (Reuters) - The Russian rouble firmed in early trade on Monday, helped by climbing oil prices and a central bank promise not to hurry with rate cuts.
The central bank kept its key rate unchanged at 10 percent last week but dropped a pledge to trim rates in the first half of 2017, underpinning the view that its monetary policy could stay tight for longer.
“Many emerging market central banks would take advantage of nicely falling inflation and a strong currency (helped by the oil price) to cut rates, which would help the anaemic economy,” Commerzbank said in a note to clients.
“But, it appears that Governor Elvira Nabiullina has tasted blood already - her strict inflation-targeting rhetoric of the past year has earned the CBR significant credibility and secured the currency.”
The rouble also saw pressure abate after the finance ministry announced the amount of daily purchases of foreign currency for its coffers this month.
The finance ministry said last week it would buy around $100 million a day on the Moscow Exchange with the help of the central bank starting from Feb. 7. The scale of the interventions came in line with analysts’ expectations.
At 0740 GMT, the rouble was 0.5 percent stronger against the dollar at 56.67 and had gained 0.8 percent to 63.10 versus the euro.
“Non-residents are not in a rush to close rouble positions, while the market balance is supported by higher current account surplus and favourable capital flows,” ING said in a note.
“Nothing endangers the rouble for now,” it said, adding that the Russian currency may firm beyond 58.5 against the dollar later on Monday.
Brent crude oil, a global benchmark for Russia’s main export, was up 0.25 percent at $56.95 a barrel, supporting Russian assets.
The dollar-denominated RTS index gained 0.4 percent to 1194.68 points, while the rouble-based MICEX was down 0.1 percent at 2224.63, pressured by the stronger rouble.
Reporting by Andrey Ostroukh; Editing by Alexander Winning