The dividend payout period ending in the Russian market in August is generally neutral for the ruble, but exchange rate fluctuations seen in June and July could be partly caused by this factor, the Russian Central Bank said in a document.
MOSCOW (Pakistan Point News / Sputnik - 17th August, 2018) The dividend payout period ending in the Russian market in August is generally neutral for the ruble, but exchange rate fluctuations seen in June and July could be partly caused by this factor, the Russian Central Bank said in a document.
"The period of payment of dividends comes to an end in the Russian market in late July-early August. This year, the volume of approved dividends was approximately 30 percent higher than the previous year's payments. Large dividend payments can lead to a significant change in the ruble exchange rate," the document said.
In June-July, the Russian Currency saw numerous fluctuations, trading between 61.8 rubles per US Dollar to 64 rubles.
The bank attributed this to the fact that some export-oriented companies sell currency in order to finance the payment of dividends, which in turn leads to the strengthening of the ruble. At the same time, a significant portion of shareholders of Russian companies are foreign investors, who convert them into currency after receiving dividends, thereby contributing to the weakening of the ruble.
"According to the estimates of the Bank of Russia, these two effects compensate each other, and the overall process of paying dividends is neutral for the ruble. It means that after making all payments and conversions, the ruble rate remains at the same level as before this process," the document said.
Last week, the Russian ruble sank to multi-month lows on Moscow Exchange (MOEX) after the introduction of new US sanctions against Russia. On Sunday, the US dollar traded at 67.7 rubles, while the euro traded at 77.2 rubles, according to MOEX figures.
