The Russian rouble has stabilized against the US dollar, while the Moscow Exchange (MOEX) stock index has reached a new post-invasion high. The rouble, which had weakened against the euro and yuan, remained steady above 90 against the dollar as the finance ministry prepared for two OFZ treasury bond auctions. Despite geopolitical tensions, the rouble has been insulated by capital controls and shrinking imports. However, concerns over President Vladimir Putin’s grip on power were raised after mercenary leader Yevgeny Prigozhin’s unsuccessful armed march towards Moscow on June 24. The rouble’s recent decline has also been attributed to falling export revenues, recovering imports, domestic political concerns, and increased net capital outflows.
Meanwhile, Brent crude oil, a global benchmark for Russia’s main export, has seen a slight increase to $79.48 a barrel, its highest level since early May. Russian stocks have also seen positive momentum, with the rouble-based MOEX Russian index reaching its strongest level since before the invasion of Ukraine in February 2022. The index rose by 0.6% to 2,877.8 points. The resumption of dividend payments by some large companies in June and July has contributed to the strength of the index. However, despite the recent gains, the MOEX Russian index still remains significantly below the record highs of over 4,000 points seen in late 2021.
On the other hand, the dollar-denominated RTS index has increased by 0.4% to 1,001.6 points. Although the index is one-third lower than its early 2022 high, Sinara Investment Bank predicts that the market will continue to have an optimistic outlook until the end of the month. Investors are expected to take advantage of the situation and reinvest the remaining portions of dividends for 2022.
Overall, the Russian economy is facing various challenges, including geopolitical tensions and fluctuations in the global market. While the rouble has stabilized against the dollar and the MOEX Russian index has reached a new high, it is essential to monitor the situation closely. The resumption of dividend payments and positive market sentiment may provide temporary relief, but the long-term impact of political concerns and economic factors on the Russian economy remains uncertain.
