The Russian rouble climbed to its strongest since late January against the dollar on Wednesday, supported by high interest rates, capital controls and the state's increased sales of foreign currency this month.

At 0648 GMT, the rouble was 0.2% stronger against the dollar at 89.95, earlier hitting 89.75, its strongest point since Jan. 31.

It had gained 0.1% to trade at 97.81 versus the euro and firmed 0.1% against the yuan to 12.40 .

Capital controls introduced by presidential decree in October 2023 require dozens of undisclosed exporting firms to deposit a high percentage of foreign currency earnings with Russian banks and then sell most of those proceeds on the domestic market. The controls were extended by a year at the end of April.

The state's overall forex sales were sharply increased to 6.3 billion roubles ($69.83 million) a day in May from 0.6 billion roubles a day in the previous month, further buttressing the Russian currency.

After three successive interest rate holds at 16%, the central bank has adopted a more hawkish stance ahead of its next meeting on June 7, with inflation remaining stubbornly high.

"Strategically, the rouble gains from the Bank of Russia's tight monetary policy and also limits on the withdrawal of capital," Alor Broker's Alexei Antonov said. "High inflation and the absence of signs of its significant decline suggest that factors supporting the rouble will continue for a long time."

Many analysts have shifted their expectations for the start of the rate-cutting cycle to later this year or early 2025.

Brent crude oil, a global benchmark for Russia's main export, was down 0.8% at $82.24 a barrel.

 

For Russian equities guide see

For Russian treasury bonds see (Reporting by Alexander Marrow; Editing by Andrew Heavens)