On Thursday, the Russian ruble climbed to a high of almost three weeks against the US dollar as well as the euro and Russian stocks also moved higher.

This was thanks to the stronger prices of oil and an upcoming tax payments period, which usually boosts demand for the ruble.

Ruble strengthens

There was a 2.4% rise in the ruble by 1444 GMT against the US dollar to reach 59.27, after it had reached its strongest point of 58.90 on July 26th.

The ruble climbed 2.8% against the euro to reach 59.94, which is the strongest the currency has been since late July.

It is expected that the currency will continue strengthening on Thursday, as tax payments made at the end of the month mean that export-focused companies will be demanding the ruble.

Market analysts said that since tax payments are approaching, export-focused companies would increase their hard currency sales and get ruble.

The ruble has also performed quite well throughout the year due to the capital controls that have been put in place.

There had been a great deal of volatility in the ruble that had seen it swing down to reach a record low of 121.53 against the US dollar.

This had occurred in March on the Moscow Exchange, only days after the currency had sent its troops into Ukraine on February 24th.

In June, the currency had rallied to a peak of seven years and reached 50.01, but the volatility has subsided since then.

Bond market

In the bonds market, two-year Russian government bond yields ended Wednesday at 9.01%, which tends to move opposite to prices.

However, they had then declined to a low of one week at 8.90%. Late on Wednesday, data had shown that consumer prices in the country declined for the sixth consecutive week.

Market analysts said that if there was not a reversal in this trend, the Russian central bank would reduce its rates once more in September.

Rate cuts

The last time the central bank had reduced rates had been back in July, when it had been slashed to 8%. The monetary authority had stated that it would evaluate the need for more reductions.

Inflation in the Russian country is slowing down and the economy also appears to be contracting. The reduction in rates eases the upside pressure on the Russian ruble and also gives bond prices a boost.

This is because deposits become less attractive and the stock market gets support because investors search for high-yielding assets in order to invest their funds.

There was a 2.7% increase in the RTS index, which is denominated in the dollar, as it reached 1,167.1 points. A 0.4% rise was also seen in the MOEX index to 2,196.1 points.

There was a 2.7% increase in Brent crude oil, which is Russia’s primary export, as it reached $96.21 per barrel.

This was because the US fuel consumption data turned out to be robust and the expected declines in the Russian supply later offset worries about a decline in demand due to an economic recession.