UPDATE 1-Rouble outperforms other emerging markets, stocks edge up
(Updates prices, adds comment)
Aug 23 (Reuters) - The Russian rouble edged up on Friday, outperforming its battered emerging markets peers over the week, supported by stable oil prices, regular tax payments and ongoing central bank interventions.
Analysts expect the market to stay on edge as investors wait to see if the Bank of Russia cuts key interest rates to support a flagging economy, and for the expected tapering of U.S. stimulus measures as early as in September.
Russian stocks inched higher, posting the first week of gains in more than a month. A weaker currency helped export-oriented sectors outperform domestically focused companies, with the metals and mining sector rising 2.9 percent over the month versus a 1.7 slide in the retail sector.
The dollar-traded RTS index rose 0.2 percent on Friday to 1,332 points, while the rouble-denominated MICEX was 0.1 percent higher at 1,397 points, reversing morning losses. The broad MSCI emerging markets index was up 1.0 percent .
"We believe domestic stocks now appear worse positioned relative to exporters that offer better valuations and dividend yields," strategists at UBS said in a note, citing a slowdown in consumer demand and wage growth and a weaker rouble.
Domestically oriented companies have outperformed exporters with the retail sector up 4.4 percent year-to-date compared to 11.3 percent losses for oil and gas.
"Exporters are more dependent on global commodity cycles and will be able to expand margins with a weaker exchange rate".
At 1336 GMT the rouble was flat against the dollar at 33.05 .
Russia's currency fell 0.5 percent versus the dollar over the week, compared to 1.9 percent losses in the South African rand, a 2.1 percent slide in the Turkish lira and a 4.6 percent fall in the Indian rupee.
"We remain bearish on the rouble from a medium-term perspective, as Russian fundamentals are deteriorating and the CBR (central bank) continues to focus on boosting rouble liquidity and is moving closer to easing policy rates," BNP Paribas said in a note.
"In the meantime, however, the rouble remains supported by stable oil prices." BNP forecasts that the rouble will decline to 33.75 to the dollar by the end of the year.
Brent crude oil prices traded above $110 a barrel on Friday, buoyed by upbeat business surveys that suggested the global economy is recovering.
The rouble was up 0.1 percent versus the euro at 44.12 . The currency was flat at 38.03 versus its dollar-euro basket, used by the central bank to gauge its market interventions.
The central bank sold $400 million in currency interventions on Aug. 21. It has sold more than $4.1 billion since the beginning of August and more than $11.5 billion since the start of the year.
While the interventions are sizeable, they have not put a significant dent in the central bank's gold and foreign exchange reserves, which were little changed at $508 billion in the latest week.
(Reporting by Maya Dyakina; Editing by Susan Fenton)