By Alexander Marrow
(Reuters) -The rouble strengthened on Friday but gave up some intraday gains after the Bank of Russia raised interest rates to 13%, a move anticipated by the market as the country battles inflationary pressures exacerbated by its weak currency.
The central bank had hiked rates by 350 basis points to 12% at an emergency meeting last month, responding to the rouble's tumble past 100 to the dollar, and most analysts polled by Reuters had expected Friday's increase.
But as the currency hit six-week highs early this week, some economists, including the CEOs of Russia's two largest banks, had been leaning in favour of a hold.
By 1403 GMT, the rouble was 0.4% stronger against the dollar at 96.92, down from a session high of 96.10.
It had gained 0.4% to trade at 103.43 versus the euro and had firmed 0.3% against the yuan to 13.31.
The central bank will keep rates high for quite a long time and until it becomes convinced that inflation is slowing down in a sustainable way, its governor Elvira Nabiullina said.
"For the rouble it is a delayed positive and the exchange rate may start to recover," said BCS World of Investments analyst Mikhail Zeltser. "In the medium term, expectations are more for 90 to the dollar than staying near the psychological 100 bar."
The central bank sharply increased its foreign currency sales for a week starting on Thursday, seeking to compensate for the planned redemption of $3 billion worth of Russian Eurobonds on Sept. 16, but the rouble was unable to capitalise significantly.
Brent crude oil , a global benchmark for Russia's main export, was down 0.3% at $93.45 a barrel, dropping back after hitting its strongest since November 2022 earlier in the session. [O/R]
Russian stocks were higher.
The dollar-denominated RTS index was up 0.6% at 1,024.4 points. The rouble-based MOEX Russian index was up 0.4% at 3,151.5 points.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.