MOSCOW, May 22 (Reuters) - Russian OFZ treasury bonds traded near their highest levels since August 2018 on Wednesday ahead of their weekly auctions by the finance ministry, while the rouble was steady.
Rouble-denominated OFZ bonds rallied this month on the back of strong foreign demand, supported by expectations of a rate cut by the Russian central bank in the near future as well as rising oil prices.
As of 0720 GMT, yields of 10-year benchmark OFZ bonds stood at 7.98%, near their lowest level since early August of 7.94% hit on Tuesday RU10YT=RR. Bonds yields move inversely with their prices.
The finance ministry supported OFZ bond prices by saying on Tuesday it will limit the offering of government papers later this year as it is fulfilling its borrowing plan faster than expected.
On Wednesday, the ministry will offer OFZ bonds maturing in 2024 RU26227=MM and papers maturing in 2030 RU26228=MM.
Demand for OFZ bonds is seen as a gauge of market sentiment towards Russian assets given lingering risks that the United States could slap sanctions on holdings of Russian state debt.
The rouble was steady at 64.42 versus the dollar RUBUTSTN=MCX and gained 0.1% to 71.85 EURRUBTN=MCX, trading at levels seen in late April.
"The rouble has chances to firm amid the upcoming OFZ bond auctions," said Nordea Bank analysts.
Russian stock indexes were slightly higher. The dollar-denominated RTS index .IRTS was up 0.2% to 1,281.3 points. The rouble-based MOEX Russian index .IMOEX gained 0.2% to 2,620.4 points.
For Russian equities guide see RU/EQUITY
For Russian treasury bonds see 0#RUTSY=MM
(Reporting by Andrey Ostroukh, Editing by William Maclean)
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