UPDATE 1-Russian rouble recovers from 2021 low vs dollar

(Adds detail, updates prices)

MOSCOW, March 25 (Reuters) – The Russian rouble extended gains versus the U.S. dollar on Thursday as local tax payments helped it recover from its lowest point so far this year, a level hit in the previous session due to the prospect of new U.S. sanctions.

Kremlin spokesman Dmitry Peskov said on Thursday he disagreed with the idea that Russian markets were in disarray ahead of expected U.S. sanctions, admitting that market volatility was higher than usual.

At 1124 GMT, the rouble was 0.9% stronger against the dollar at 75.87, heading away from 76.98, its weakest since mid-November, hit on Wednesday. It gained 0.9% to trade at 89.61 versus the euro.

“The spotlight will be on the EU leaders’ summit, where the EU’s relationship with Russia is on the agenda,” Sberbank CIB said in a note.

“If the geopolitical backdrop remains more or less stable, the rouble should be able to claw its way back to 76 and possibly move beyond this mark, further paring its losses from earlier this week.”

The rouble hit a fresh 2021 low against the dollar on Wednesday, with rouble-denominated OFZ treasury bonds also under pressure, as the market braced for more U.S. sanctions.

President Joe Biden has vowed Russian President Vladimir Putin will “pay a price” for alleged election meddling and cyber hacking and is expected to impose sanctions as soon as this week. It was not immediately clear what the new sanctions may look like. Moscow denies any wrongdoing.

“We expect the rouble to try to regain grounds after losses earlier this week. But as the peak of tax payment will pass, the currency would lose support from exporters,” Promsvyazbank said in a note.

On Thursday, Russian exporting companies finish paying the mineral extraction tax, for which they are selling foreign currencies to buy the rouble, providing support for the Russian currency.

The Russian stock market was mixed. The dollar-denominated RTS index rose 0.1% to 1,438.2 points. The rouble-based MOEX Russian index was 0.6% lower at 3,462.9 points.

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