Forex-Signals: EURUSD

MOSCOW: The rouble firmed slightly early on Tuesday, hitting new 2012 highs versus the dollar thanks to domestic tax payments and shrinking banking sector liquidity, while stocks were steady.

The amount of roubles available in the banking system shrank further, pushing interbank overnight lending rates to nearly 5 percent from levels of below 4 percent seen earlier this month.

Liquidity, as measured by volume of cash banks place on correspondent and deposit accounts with the central bank, stood at 772.4 billion roubles ($25.04 billion) on Tuesday – a level which analysts say pushes interest rates up to a level at which banks start seeking funding from the central bank, rather than from the market.

Analysts see Russian liquidity levels are comfortable when they stay above one trillion roubles.

On the back of that shortfall and the need to meet local tax payments by the end of the month, some market players were seen converting dollars and euros into roubles.

By 0711 GMT, the rouble was flat at 30.90 < after briefly firming to its new 2012 high of 30.84. Against the euro, the rouble firmed 0.1 percent to 40.21.

“The rouble enjoys support from investors’ growing interest in emerging markets,” said Anton Zakharov, an analyst at Promsvyazbank.

Versus the euro-dollar basket, used by the central bank to track exchange rates, the rouble gained 0.05 percent to 35.09, its strongest since early September.

The RTS dollar based stock index fell 0.4 percent to 1,516.9 points and its rouble-traded peer MICEX was down 0.6 percent at 1,490.0 points.

“Markets are looking for a breather after the recent strong growth trend, as most commodities are ticking down and U.S. futures are down 0.4 percent,” analysts Uralsib said in a note.

Later in the day investors will be watching December data from the Federal Statistics Service, or Rosstat, on Russian producer prices, unemployment, retail sales, and capital investment.

The Russian market, however, is still on track to post its strongest monthly rise since November and further gains are possible, especially if the MICEX surpasses strong resistance at 1,500 points.

Analysts at Nomos Bank said a possible strengthening of a conflict around Iran sanctions could push oil prices higher, and prompt Russia to outperform other stock markets.

“Our recommendation to hold (long) positions in shares remains unchanged,” they said.

Russia’s 30-year benchmark Eurobond yield ticked up to 4.4 percent from 4.35 percent the previous day but remained near its lowest since early December.