Ruble extends recovery gains, shares rise on 5th trading day

March 30 (Reuters) – The ruble strengthened on Wednesday, extending the recovery and moving it to levels seen for what Russia calls “a special operation” in Ukraine.

After a month-long hiatus, shares rose on the fifth trading day.

At 0720 GMT, the ruble was up 1% at 84.30 against the dollar and had reached 82.56 on the Moscow stock exchange, a level last seen on February 25, the day after Russia sent tens of thousands of troops to Ukraine sent.

Against the euro, the ruble rose 0.8% to 93.36, after briefly reaching 90.73, the highest level since February 23.

The ruble gained some support from the recent round of talks between Russia and Ukraine in Istanbul, where the Russian delegation pledged to wind down military operations around the Ukrainian capital Kiev.

The Russian currency extends gains made last week after President Vladimir Putin demanded that natural gas exported to Europe or the United States be paid for in his country’s currency.

European countries, which import about 40% of their gas from Russia and pay mostly in euros, say state-controlled Russian gas giant Gazprom has no right to re-sign contracts. The G7 group of countries rejected Moscow’s demands this week.

The ruble’s dynamics have been artificial to some extent lately. The currency, which was free to roam until the end of February, is now governed by capital controls, a ban on buying dollars and euros in cash and other administrative measures.

The central bank started buying gold from banks on Monday at a fixed price of 5,000 rubles per gram.

Taking into account current gold prices, the ruble has room to hold at about $81 per dollar, Otkritie Bank said in a note.

Sberbank CIB said the ruble could continue to strengthen until the central bank began easing capital controls.

In the interbank market, the ruble traded about 86 to 87 against the dollar. Banks offered to sell euros for 98.50 rubles and buy for 94 rubles.

volatile stocks

Russian stocks have risen sharply and at times erratically in recent days after the central bank allowed the market to end a nearly month-long lull.

Trading volumes are much lower than normal and non-residents are not allowed to sell stocks and OFZ ruble bonds until April 1.

London-listed internet company VK, one of the few companies to report debt service problems, saw its depository receipts in Moscow rise 27% on Wednesday, after rising 72.3% the day before.

Shares in Russian state energy company Inter RAO rose 25% after the company recommended paying dividends.

The dollar-denominated RTS index rose 5.1% to 926.9 points, and the ruble-based Russian MOEX index was 3.2% higher at 2,485.7 points.

Flagship Aeroflot, one of the most volatile securities since reopening, rose 8.1%. Oil giant Rosneft was up 4.6% and dominant government borrower Sberbank gained 3.5%. (Reporting by Reuters; editing by Bradley Perrett)

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