Russian stocks retreat from pre-invasion high as rouble rebounds
By Alexander Marrow
(Reuters) — Russia's benchmark stock index retreated on Monday from its highest since before Moscow sent troops into Ukraine on Feb. 24, 2022, after the central bank suddenly announced an emergency policy meeting on Tuesday, ending a sharp slide in the rouble.
President Vladimir Putin's economic adviser blamed the central bank's «soft monetary policy» for the weakness of the currency, which has come under heavy pressure from Russia's shrinking current account surplus and demand for foreign currency outstripping supply.
But after slumping to its weakest in almost 17 months past 101 per dollar, the rouble pared all intraday losses to strengthen after the central bank announced an extraordinary policy meeting, to be held on Tuesday, raising expectations for a hike in borrowing costs.
The bank last raised its key rate by 100 basis points to 8.5% on July 21.
«Another significant increase in the key rate is likely,» said BCS World of Investments in a note.
By 1510 GMT, the rouble was 1% stronger against the dollar at 98.45, firming back below the 100 threshold.
It gained 1.4% to trade at 107.23 versus the euro and firmed 1.8% against the yuan to 13.45 , also paring intraday losses against both.
Sweeping volatility has become the norm for Russian assets. Stocks on Monday briefly hit their highest since before Moscow launched what it calls a «special military operation» in Ukraine, before falling back.
The rouble-based MOEX Russian index was 0.1% higher at 3,157.1 points.
«The unstoppable and puzzling growth of the USD/RUB rate… continues to support retail investors' interest in equities as a way to save their depreciating rouble savings,» said Sinara Investment Bank in a note.
The dollar-denominated RTS
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