September 20, 2018 / 10:54 AM / 2 months ago

UPDATE 1-Rouble at strongest since mid-Aug, stocks at record high

(Adds detail, updates prices)

MOSCOW, Sept 20 (Reuters) - The Russian rouble recovered against the dollar to its strongest since mid-August and stocks hit an all-time high on Thursday, helped by Russia’s month-end tax payments and globally better sentiment towards emerging markets.

Russian financial markets are in recovery mode after a massive sell-off in August that was driven by concerns about more U.S. sanctions and sent the rouble tumbling to more than two-year lows.

The rouble had gained 0.7 percent to 66.36 versus the dollar as of 1025 GMT, after briefly hitting 66.2350, a level last seen on Aug. 15.

“A stable external background, the dollar easing against major currencies, Brent crude near $80 per barrel and Russia’s tax payments due next week, all this has a favourable impact on the supply-demand balance and bolsters the rouble,” said Dmitry Polevoy, chief economist at the Russian Direct Investment Fund.

Russian tax payments kick in by the end of the month, which are expected to support the rouble as export-focused companies usually convert their dollar revenues to meet local liabilities.

With the rouble moving away from 70.57, the weakest level since early 2016 that it hit on Sept. 10, Economy Minister Maxim Oreshkin said he still expected the currency to finish this year at 64 versus the greenback.

“Despite the volatility that we saw in recent months we have kept our exchange rate forecast for this year and for the medium term,” Oreshkin told a government meeting.

Still, the rouble has a long way to recover to levels of around 62-63 seen before the sell-off wave that started in August on the back of fears of more U.S. sanctions and a global ditching of emerging markets assets.

Versus the euro, the rouble gained 0.4 percent to 77.72 , its strongest since Aug. 21.

Even though geopolitical tensions remained in focus, especially after a Russian plane was downed near Syria’s coast this week, Russian stocks rallied to record highs on the back of higher prices for oil, the country’s key exports.

The rouble-based MOEX index was 0.7 percent higher at 2,420.0 points, after touching an all-time high of 2,426.0, up more than 14 percent year-to-date.

Its dollar-denominated peer RTS was up 0.7 percent to 1,149.7 points, its highest since early August.

For Russian equities guide see

For Russian treasury bonds see (Reporting by Andrey Ostroukh; Editing by Mark Potter)

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