Rouble reaches near three-month high on strong OFZ demand

Credit: REUTERS/ILYA NAYMUSHIN

The Russian rouble opened firmer on Tuesday, briefly reaching a near three-month high against the dollar, helped by optimism over U.S-China trade talks and the prospect of strong demand on Wednesday's OFZ treasury bond auctions.

MOSCOW, Oct 22 (Reuters) - The Russian rouble opened firmer on Tuesday, briefly reaching a near three-month high against the dollar, helped by optimism over U.S-China trade talks and the prospect of strong demand on Wednesday's OFZ treasury bond auctions.

The rouble was 0.1% stronger against the dollar at 63.68 RUBUTSTN=MCX by 0744 GMT, after briefly touching 63.57, its highest level against the dollar since July 31.

The rouble was 0.1% stronger versus the euro to trade at 70.96 EURRUBTN=MCX.

OFZ bond auctions, usually held on Wednesdays by the finance ministry, often prompt market players to convert foreign currency to buy the country's sovereign debt.

That should be enhanced this week by expectations that the Russian central bank will lower its key rate from 7% at Friday's rate-setting meeting.

Yields on 10-year OFZ treasury bonds RU10YT=RR held steady at 6.53%, two basis points higher than their lowest level since May 2013, reached on Monday. Yields were 7% in early October.

The rouble was also helped by optimism that China and the United States were making headway in trade negotiations, after China's Vice Foreign Minister Le Yucheng said the two countries had achieved some progress earlier on Tuesday.

This week, the rouble is also set to see support from month-end tax payments that usually prompt export-focused companies to convert part of their foreign currency revenues to meet local liabilities.

"The optimism of investors ahead of the Russian central bank's meeting is helping to strengthen the Russian rouble, as are the upcoming large tax payments on Oct. 25," Rosbank said in a note.

Brent crude oil LCOc1, a global benchmark for Russia's main export, was down 0.1% at $58.9 a barrel.

Russian stock indexes were up.

The dollar-denominated RTS index .IRTS was up 0.3% to 1369.7 points. The rouble-based MOEX Russian index .IMOEX was 0.2% higher at 2767.4 points.

After strong gains on Monday, shares in internet group Yandex YNDX.MM outperformed the broader market again on Tuesday, up 1.5%, recouping some of the heavy losses sustained during last week's trading.

For Russian equities guide see RU/EQUITY

For Russian treasury bonds see 0#RUTSY=MM

(Reporting by Alexander Marrow Editing by David Holmes)

((alexander.marrow@thomsonreuters.com; +7 495 775 1242;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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