Russian ruble recovers from low as drones attack capital city Moscow

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The ruble steadied on Tuesday after slumping to a more than one-month low against the dollar as drones attacked Moscow and the end of support of a favorable tax payment period.

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Ukraine launched one of its biggest drone attacks on Moscow, according to Russia, whose defense ministry said all were destroyed approaching the city.

Ukrainian presidential aide Mykhailo Podolyak denied Kyiv was directly involved in targeting Moscow on Tuesday.

“News of a drone attack in Moscow could be negative for the Russian market,” said Veles Capital analyst Elena Kozhukhova.

By 1134 GMT, the ruble was unchanged against the dollar at 80.83, earlier hitting 81.39, its weakest point since April 28. It was also steady against the euro and yuan at 86.84 and 11.38, respectively.

Month-end tax payments, which usually support the ruble as exporters convert foreign currency revenue to meet local liabilities, were due on Monday.

“The ruble yesterday lost support from the tax period, which never seriously strengthened it,” Alor Broker said in a note.

The ruble, which had lost around 1 percent in the previous session, has also faced pressure from local demand for foreign currency as Russian importers shift supplies to the east from the west and new trading patterns emerge.

Monday’s decline gives exporters an additional incentive to sell foreign currency amid low liquidity, said a trader at a Russian bank.

“All kinds of geopolitical risks are pretty much already built in to the exchange rate,” the trader said.

Brent crude oil, a global benchmark for Russia’s main export, was down 1.5 percent at $75.94 a barrel.

Russian stock indexes were volatile, opening lower before reversing course to hit a more than one-year high.

The dollar-denominated RTS index was up 0.4 percent to 1,068.7 points. The ruble-based MOEX Russian index was 0.4 percent higher at 2,741.8 points, its strongest point since early April 2022.

Shares in oil major Rosneft were down around 0.1 percent after the company said its board had recommended a dividend of 17.97 rubles per share, contrasting with many Russian companies that have scrapped their annual payouts.

“Dividend payments are resuming and one can expect that this will provide an additional impulse to the stock market,” said Alfa Bank in a note.

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