Rouble steady

The Central Bank widened the ruble's trading band on Wednesday for the third time in as many days, yet for the second straight day the currency gained against both the dollar and the euro as tax payment deadlines helped produce a ruble deficit.


While authorities said the ruble was nearing the end of its two-month fall, analysts debated whether the currency's equilibrium would actually hold.

The ruble closed at 37.17 against the dollar/euro basket on Wednesday, gaining 0.6 percent from Tuesday's 37.38 close. The currency strengthened from 32.97 to 32.77 against the dollar and from 42.64 to 42.21 against the euro.

The deadline for VAT tax payments was Jan. 20, and companies will have to pay profit taxes Jan. 28, said Katya Malofeyeva, chief economist at Renaissance Capital. The domestic demand for rubles is likely tied to the two tax payments and may not continue once the period for the payments is over, she said.
A widened band and two days of growth explains everything despite the obvious effect of the tax payments, because the fluctuations in the RUR exchange rate over the last eight years have never been dramatic. Stability is the key word and that cannot be denied even by the country's most ardent pessimists or by those who like to invent woeful stories about how terrible Russia is.
The currency reflects the economy and the people...stable, vibrant, confident and strong. Period.