The Russian ruble weakens against the dollar and the euro at the end of the fiscal period

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MOSCOW — The Russian ruble gave up early gains in a volatile start to trading on Thursday, weighed down by expectations that the government could try to limit the strengthening of the currency and the end of a favorable fiscal period.

Thursday marks the deadline for ruble-supporting income tax payments, which could lead exporters to cut sales of foreign currency earnings, although Russia’s large current account surplus may protect the currency from d a significant weakening.

By 08:34 GMT, the ruble had weakened 0.1% against the dollar at 59.94 and was down 0.7% to trade at 61.16 against the euro.

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The ruble could trade in the 58-60 range against the greenback on Thursday, analysts at Promsvyazbank said, after the US Federal Reserve raised the benchmark rate by 75 basis points as expected on Wednesday.

But any strengthening of the ruble could be tempered by expectations that the government will soon change and reinstate Russia’s fiscal rule that diverts excess oil revenue to its bad weather fund with a new price limit, Promsvyazbank added.

Russia’s Federal Statistical Service released data on Wednesday evening that paints a grim picture of industrial production, real disposable income and retail sales, all down year-on-year, although the unemployment rate remained at a low. record.

The ruble has become the world’s best-performing currency so far this year, boosted by measures to protect Russia’s financial system from Western sanctions imposed after Moscow sent troops to Ukraine on Feb. 24. These include restrictions on Russian households to withdraw their foreign currency savings.

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Rising oil prices, which hit their highest level since early July, could help the ruble in its quest to further regain the heavy losses suffered on Tuesday, Banki.ru analyst Bogdan Zvarich said.

Brent crude, a global benchmark for Russia’s top export, rose 1.2% to $107.9 a barrel.

« There are no fundamental reasons for the significant weakening of the ruble – the demand for foreign currency from importers and the population are still not able to match the supply of foreign currency from exporters, » Zvarich said.

Russian stock indices were down.

The dollar-denominated RTS index fell 0.9% to 1,144.1 points. Russia’s rouble-based MOEX index was down 0.9% at 2,177.2 points. (Reporting by Reuters;)