Russian rouble weakens as Moscow Exchange relaunches early FX session

The rouble on Monday was expected to continue trading within a 60 to 61 target range against the greenback, said Russian analysts.

 An employee holds sheets of the newly designed Russian 100-rouble banknotes at the Goznak printing factory in Moscow, Russia July 6, 2022.  (photo credit: MOSCOW NEWS AGENCY/HANDOUT VIA REUTERS)
An employee holds sheets of the newly designed Russian 100-rouble banknotes at the Goznak printing factory in Moscow, Russia July 6, 2022.
(photo credit: MOSCOW NEWS AGENCY/HANDOUT VIA REUTERS)

The Russian rouble weakened on Monday as the Moscow Exchange resumed its early morning session for the first time since late February, with the market preparing for the finance ministry to return to the debt market with OFZ treasury bond auctions.

Russian stocks strengthened as non-residents from what Russia deems "friendly" countries - those which have not hit Moscow with sanctions - were allowed to resume some trading for the first time since February when Moscow sent tens of thousands of troops into Ukraine.

By 0711 GMT, the rouble was 0.2% weaker against the dollar at 60.69 and had lost 1.1% to trade at 61.61 versus the euro.

The rouble on Monday was expected to continue trading within a 60 to 61 target range against the greenback, Promsvyazbank analysts said in a note.

"There are no drivers seen on the FX market," Promsvyazbank said.

 Deputy Governor of the Bank of Russia Sergey Belov holds the newly designed Russian 100-rouble banknote during a presentation in Moscow, Russia June 30, 2022. (credit: REUTERS/EVGENIA NOVOZHENINA) Deputy Governor of the Bank of Russia Sergey Belov holds the newly designed Russian 100-rouble banknote during a presentation in Moscow, Russia June 30, 2022. (credit: REUTERS/EVGENIA NOVOZHENINA)

Market players are keeping an eye on the finance ministry's planned restart of weekly auctions of its OFZ bonds later in September to test the market's appetite with limited volumes on offer.

What was Russia's play? 

Russia suspended borrowing through OFZ bonds, which it uses to plug budget holes, in February, weeks before it started what it calls a "special military operation" in Ukraine, which triggered unprecedented Western sanctions against Moscow.

Stocks opened lower before posting gains, as some non-residents returned.

"Most likely, this will have a neutral effect on the Russian market, since a significant part of the securities is still banned for non-residents," BCS Global Markets said in a note.

"Most likely, this will have a neutral effect on the Russian market, since a significant part of the securities is still banned for non-residents."

BCS Global Markets

The dollar-denominated RTS index was up 0.5% to 1,268.8 points. The rouble-based Russian index was 0.8% higher at 2,445.0 points.

Currency markets opened at 0350 GMT. The Moscow Exchange is also set to bring back the evening session on its stock market, which will run until 2050 GMT.