Rouble rallies

The rouble firmed sharply in volatile trade on the Moscow Exchange on Monday, reversing some of last week's heavy losses as it retained support from capital controls and Russia's strong trade account.

The rouble plunged last week as the central bank slashed interest rates, signalling more cuts. The prospect of an easing of capital controls and a possible sovereign default added to downside pressure.

At 0807 GMT, the rouble was nearly 5 per cent stronger at 63.47 to the dollar. Last Wednesday it had hit 55.80 to the dollar, its strongest level since February 2018.

Against the euro, the rouble rose 6 per cent to 65.40, having last Wednesday hit a seven-year high of 57.10, at the peak of month-end tax payments that usually prompt export-focused companies to convert foreign currency to meet liabilities.

"The overall fundamental picture for the rouble is not changing much ... We're not ruling out a return to levels of 60-63 to the dollar," said Dmitry Polevoy, head of investment at LockoInvest firm.

Boosted by capital controls, the rouble had risen to become the world's best-performing currency so far this year until last week's slide. New gas payment terms for EU consumers that require conversion of foreign currency into roubles and a fall in imports have also supported the rouble.

Market eyes are focused on Russia's ability to service its foreign debt after the United States pushed it to the brink of a historic debt default by not extending its licence to pay bondholders, as Washington ramps up pressure following what Russia calls a "special military operation" in Ukraine.

Russia plans to settle its Eurobond obligations using a mechanism similar to the scheme used to pay for Russian gas in roubles, Finance Minister Anton Siluanov told the Vedomosti daily.

Russian stock indexes were mixed.

The dollar-denominated RTS index rose 4.2 per cent to 1,181.7 points. The rouble-based MOEX Russian index was 0.3 per cent lower at 2,401.0 points, pressured by the rouble's recovery.