Rouble gains on findings of U.S. report on Trump-Russia ties

March 25, 2019

By Andrey Ostroukh

MOSCOW (Reuters) – The Russian rouble strengthened on Monday to remain the world’s best-performing currency year-to-date as it received a boost from details of a report on Russian interference in the 2016 U.S. election.

A U.S. investigation led by Special Counsel Robert Mueller did not find that any of President Donald Trump’s campaign officials knowingly conspired with the Russian government in the 2016 election, according to details of the report released on Sunday.

The news dominated Russian media on Monday, raising hopes that Washington could refrain from imposing more sanctions against Moscow, something that proved harmful to Russian markets in recent years.

“The probability of harsh sanctions against Russia declines,” said Alexei Antonov, an analyst at Alor Brokerage.

“Conceptually, it should be supportive (for Russian assets) if we now assign a slightly lower likelihood to sanctions,” said Guido Chamorro, a portfolio manager at Pictet Asset Management.

Russian officials welcomed Mueller’s report. The Kremlin said Russia was ready to improve ties with the United States, while a senior lawmaker proposed a “reset” in ties with Washington.

The issue of relations between Trump and Moscow is likely to remain in focus in the foreseeable future, analysts at Sberbank CIB said.

“Two congressional committee hearings on Russia have been scheduled for Tuesday and Thursday, so there is a risk of negative headlines,” they said.

The rouble gained 0.6 percent to 64.30 at 1219 GMT , heading towards its strongest level since August 2018 of 63.63 which it hit last week. The rouble has gained more than 8 percent against the greenback this year.

Versus the euro, the rouble was 0.5 percent stronger at 72.74.

The rouble retains support from month-end tax payments that usually prompt export-focused companies to convert their dollar revenues to meet local liabilities. This month, tax payments are higher than usual.

The Russian bond market showed a limited reaction to the U.S. report.

Yields of 10-year benchmark OFZ treasury bonds, which move inversely with their prices, declined to 8.22 percent from 8.31 percent seen late on Friday, the day they moved higher following the central bank’s decision to hold rates.

Brent crude oil, a global benchmark for Russia’s main export, shed 0.3 percent to $66.85 a barrel but remained supportive for Russian assets as it hovered near 2019 highs.

Russian stock indexes erased earlier losses and headed higher. The dollar-denominated RTS index climbed 0.7 percent to 1,221.8 points, while the rouble-based MOEX Russian index was little changed at 2,492.3 points.

(Reporting by Andrey Ostroukh,; Additional reporting by Marc Jones, Gabrielle T├ętrault-Farber and Polina Nikolskaya; Editing by Toby Chopra and Ed Osmond)

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