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UPDATE 1-Rouble firms as Russia taps domestic debt market for first time since Feb

UPDATE 1-Rouble firms as Russia taps domestic debt market for first time since Feb

Reuters · 09/14/2022 08:14
UPDATE 1-Rouble firms as Russia taps domestic debt market for first time since Feb

Updates prices, adds OFZ auction

- The rouble firmed past 60 against the dollar and euro on Wednesday as Russia's finance ministry auctioned treasury bonds for the first time since February, enjoying demand 2-1/2 times higher than the relatively small volume offered.

By 1206 GMT, the rouble was 0.4% stronger against the dollar RUBUTSTN=MCX at 59.67. It had gained 0.4% to trade at 59.68 versus the euro EURRUBTN=MCX.

"The focus is on the first OFZ placement in half a year," said Georgy Vashchenko, deputy director of Freedom Finance Global's research department, expecting borrowing to be used to refinance domestic debt, among other things.

Russia in February suspended weekly auctions of the OFZ treasury bonds it uses to plug budget holes. On Wednesday it offered a 10-year bond RU26239=MM and a volume of 10 billion roubles ($167.5 million), seeing demand of 24.8 billion roubles.

Demand at Russia's last OFZ auctions on Feb. 9 stood around 80 billion roubles.

"Demand is likely to be high at the first auction, since investors expect a key rate cut on Friday," said Vashchenko.

The majority of analysts polled by Reuters expect the Bank of Russia to cut its benchmark interest rate by 50 basis points to 7.5% on Friday, to encourage lending as inflation continues to slow.

However, Russian households' inflationary expectations, an indicator the central bank said it would watch closely in the run up to meetings in September and October, rose for the second month running, data showed on Wednesday.

Russian stock indexes were lower, with the dollar-denominated RTS index .IRTS down 1.2% to 1,268.4 points, edging away from a more than 2-month high hit in the previous session. The rouble-based MOEX Russian index .IMOEX was 1.8% lower at 2,402.3 points.

"In the term, the MOEX index may consolidate around 2,400-2,450 points, but in the medium term we expect growth to continue – support may come from dividend payments by Russian companies, which this year have shifted slightly from the middle to the end of the year," said BCS Global Markets in a .


($1 = 59.7000 roubles)


(Reporting by Alexander Marrow; Editing by Alexander Smith and Emelia Sithole-Matarise)

((alexander.marrow@thomsonreuters.com))