July 8, 2019 / 8:05 AM / 2 months ago

Russian rouble under pressure from dividend payments

MOSCOW, July 8 - The Russian rouble slipped on Monday to its lowest level in more than two weeks as investors converted rouble dividend payments into hard currency.

At 0730 GMT, the rouble was 0.1% weaker against the dollar at 63.86, its lowest since June 19, and was unchanged to trade at 71.67 versus the euro.

The rouble has come under increased pressure this month as shareholders who receive dividends tend to convert the roubles they get into other currencies, including the dollar or the euro.

“This year companies will pay over 2 trillion roubles in dividends, and shareholders are now receiving the proceeds,” said Georgy Vashchenko, an analyst at Freedom Finance.

The bulk of dividend payments will be carried out by July 20. Analysts expect that the pressure on the currency will ease after that date, which coincides with month-end tax payments that often support the rouble.

These tax payments prompt export-focused companies to convert their dollars to the Russian currency.

Russian stock indexes were also down on Monday. The dollar-denominated RTS index was down 0.8% to 1,388 points, while the rouble-based MOEX Russian index was 0.8% lower at 2,813 points.

Investors are eagerly awaiting the monetary policy testimony of U.S. Federal Reserve Chairman Jerome Powell on Wednesday and Thursday to see whether he would signal that the central bank would go slower on rate cuts this year following stronger than anticipated growth in U.S. jobs in June.

“The U.S. Treasury market and money markets have anticipated a lot of easing for this year and might now re-consider and re-evaluate the scope for monetary loosening,” analysts from VTB Capital said in a note.

Oil prices, which can buttress the Russian currency, edged higher on Monday, supported by better-than-expected U.S. jobs data and geopolitical risks.

For Russian equities guide see

For Russian treasury bonds see

Reporting by Anna Rzhevkina; Editing by Gabrielle Tétrault-Farber and Emelia Sithole-Matarise

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