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The Russian rouble strengthened on Thursday, crossing 66 to the dollar for the first time since August, as global political worries eased after Washington and Beijing agreed to continue trade talks.

At 0740 GMT, the rouble was 0.4% stronger against the dollar at 65.97, up from the 67.14 it had touched earlier this week, its lowest since Feb. 14.

Versus the euro, the rouble had gained 0.3% to trade at 72.82, its strongest since Aug. 23.

The rouble and other emerging-market currencies gained ground as China and the United States agreed to hold trade talks in early October, easing fears that an escalating trade war would trigger a global recession.

The rouble also enjoyed support from buyers of Russian OFZ treasury bonds, who were expected to snap up bonds before the central bank's rate-setting meeting on Friday.

Investors expect the central bank to cut its benchmark interest rate by 25 basis points to 7.0% on Friday.

This week, demand was strong for OFZ bonds, a gauge of investor sentiment towards Russian assets. Demand exceeded the amount of OFZ bonds on offer by three-fold at the finance ministry's weekly auction on Wednesday.

That has pushed yields of 10-year OFZ bonds to 7%, their lowest since March 2018. Bond yields move inversely with their prices.

"Confidence in the rate cut is growing," Freedom Finance brokerage said.

Russian stock indexes edged up. The dollar-denominated RTS index was up 0.5% to 1,338 points. The rouble-based MOEX Russian index was 0.4% higher at 2,803 points.

Shares in Surgutneftegaz fell 5% after its chief executive, Vladimir Bogdanov, said the recent spike in shares was caused by speculative trading.

Copyright Reuters, 2019


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