Forex Market: USD/RUB touches one-month lows as tax payments offset Western sanctions on Russia

The ruble advanced for a third day to touch the strongest level in a month against the US dollar, after Russian exporters started buying the local currency to meet a tax deadline, while Russian equities rose amid speculation Western nations wont intensify sanctions over the Crimea annexation.

USD/RUB touched a one-month low at 35.591 at 09:55 GMT, after which the pair trimmed some losses to trade at 35.663 at 15:10 GMT, losing 1.2% on a daily basis. Support was likely to be received at February 25th low, 35.519, while resistance was to be encountered at March 24th high, 36.331.

The Micex Index of equities climbed 2.1 percent to 1 325.44. The index has lost more than 13% so far this year, as tension between Russia and the West over Ukraines breakaway Crimea region escalated. At their first meeting after Russia annexed Crimea last week, G-7 leaders said yesterday that they won’t attend the planned G-8 summit in Sochi and instead will hold their own meeting in June in Brussels.

However, some investors deemed the sanctions that US and its allies imposed on Russia insufficient, as they have so far been limited to individual visa bans and asset freezes.

Demand for the Russian currency was heightened in the past week as nations exporters seek to sell foreign-currency revenue to meet their tax obligations.

According to the median of three estimates compiled by Bloomberg, the tax deadline for Russian companies peaks this week with payments of 285 billion rubles (around $8 billion) in mineral-extraction tax today and 290 billion rubles of corporate income tax until March 28.

Meanwhile, greenbacks demand was heightened after consumer confidence in the US rose more than expected, reaching a 6-year high in March.

US consumer confidence increased to 82.3 this month, the strongest since January 2008, from 78.3 in February and exceeding analysts forecasts for a gain to 78.6, data by the Conference Board showed today.

However, a separate report revealed that sales of new homes declined to a five-month low last month, raising concern the industry may need more time to recover after the frigid weather curbed demand earlier this year.

Purchases of new homes slid by 3.3% in February to an annualized 440 000 pace, the weakest level since September, data by the US Commerce Department showed today. Januarys purchases were revised to 455 000 units from 468 000 units previously reported. Analysts expectations pointed to a 4.9% decline in February.

Elsewhere, GBP/USD touched a daily low at 1.6482 at 07:45 GMT, after which it consolidated to trade little changed at 1.6499 at 10:31 GMT, adding 0.01% for the day. Support was likely to be found at March 24th low, 1.6466, also the pair’s weakest since February 12th, while resistance was to be met at March 24th high, 1.6536.