Ruble stabilized, with interest rate decision at the center of attention

The Russian ruble strengthened on Monday thanks to a favorable end-of-month tax period and the prospect of upcoming dividend payments, which also boosted equities as investors await the central bank's interest rate decision on Friday.

The ruble has been bolstered by the upcoming tax period at the end of the month, during which export-oriented companies typically convert foreign-currency earnings into rubles to cover their tax liabilities on the domestic market.

According to Dmitry Polevoy, head of investment at Locko Invest, the role of tax repayments and dividend payments by Russian companies, which are due in November, is that the ruble exchange rate has continued its general trend of strengthening against the U.S. dollar.

The focus is on the Bank of Russia, which has cut its interest rate six times in 2022 after it was urgently raised to 20% in February. Last month, the bank cut rates to 7.5%.