Ruble soars vs dollar after EU crisis summit

The Russian ruble jumped 50 kopecks against the U.S. dollar in early MICEX trade on Thursday, as markets reacted with relief to the decisions made to solve Europe's economic woes at the EU crisis summit, analysts said. The ruble strengthened to 31.21 against the greenback and rose 11 kopecks against the euro to 42.30. The value of the bi-currency basket, comprising $0.55 and 0.45 euros, fell 32 kopecks to 35.65 rubles. "The first reason is the U.S. dollar's decline on global trading floors caused by the participants' reaction to the results of the eurozone summit. The euro/dollar rate rose above $1.40 per euro, while oil prices have grown by over 1.5 percent," said Alexandra Lozovaya, head of analysis at Vector Securities. European leaders announced early on Thursday plans to increase the eurozone's main bailout fund to one trillion euros as part of a package of measures to stave off Europe's spiraling debt crisis. The rescue plan also includes a deal reached with private creditors to write off 50 percent of Greece’s debt, which could make the country’s debt burden sustainable. The eurozone and the International Monetary Fund (IMF) will also give debt-burdened Greece another 100 billion euros to help stabilize its economy. Russian presidential aide Arkady Dvorkovich said the decisions taken by the EU leaders at the summit were quite adequate and the markets would react accordingly. "There are grounds for cautious optimism. The decision has been taken, and I think it is minimally necessary for the markets to react adequately and consider it sufficient at this stage," he added. The second reason for the ruble's appreciation is large tax payments by Russian companies, Lozovaya said. "The second reason for the ruble's strengthening is the banks' demand for the Russian currency due to large corporate tax payments in late October, including the minerals extraction tax, excise taxes and corporate profit tax," she said, adding that the ruble was likely to be strong against the dollar up to the end of October and its exchange rate would stay at the level of 30.70 rubles per dollar. European stocks opened higher in early Thursday trade, with the UK's FTSE 100 index gaining 2.02 percent to 5,665.49, Germany's DAX 3.43 percent to 6,222.75 and France's CAC 40 2.43 percent to 3,246.60. In Russia, the RTS was up 3.81 percent at 1,588.45 and the MICEX up 2.75 percent to 1,540.97 at 12:10 pm.