MOSCOW, July 22 (Reuters) – The Russian rouble strengthened on Monday, helped by rising oil prices, ahead of a Russian central bank meeting on Friday which is expected to cut the key interest rate.
At 0730 GMT, the rouble was 0.2% stronger against the dollar at 62.9 and had gained 0.1% to trade at 70.6 versus the euro.
The central bank is due to hold a rate-setting meeting on July 26 where it is seen lowering the key rate, now at 7.50%.
Rosbank analysts said in a note they expected the central bank to cut the rate by 25 basis points amid a rapid slowdown in inflation.
A deeper cut of 50 basis points is seen unlikely for now as the central bank prefers smaller shifts, the bank’s head of monetary policy, Alexei Zabotkin, said last week.
For now, the Russian currency is enjoying support from monthly tax payments that tend to boost demand for the rouble by export-focused companies.
Later this month, investors will be closely watching the European Central Bank and the U.S. Federal Reserve, which are both expected to consider cutting rates.
Prices for oil, Russia’s key export, offered support to Russian assets as they rose on concerns that Iran’s seizure of a British tanker might lead to supply disruptions in the Middle East.
Brent crude oil was up 2.0% at $63.73 a barrel.
However, Russian stock indexes were slightly lower. The dollar-denominated RTS index was down 0.2% to 1,348 points. The rouble-based MOEX was 0.3% lower at 2,691 points.
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(Reporting by Anna Rzhevkina; Additional reporting by Vladimir Abramov; Editing by Andrey Ostroukh and Mark Potter)