MOSCOW: The rouble firmed past 71 against the U.S. dollar on Tuesday, gaining strength along with other emerging market currencies and receiving extra support from high oil prices and expectations of an imminent rate increase by the Bank of Russia.

At 0745 GMT, the rouble was 0.4pc stronger against the dollar at 70.98 after hitting 70.84, its strongest level since July 2020.

Against the euro, the rouble was steady at 82.68, away from levels of around 70 seen in early 2020 before the COVID-19 pandemic began.

The central bank is in focus this week as it is widely expected to raise the key rate by 25 or 50 basis points from 6.75pc on Friday in an attempt to rein in stubbornly high inflation.

The rouble is also expected to get support from month-end tax payments that boost demand for the currency, but the dividend season in late October may prompt some investors to convert rouble-denominated proceeds into other currencies, which in turn will put pressure on the rouble.

Russia's rouble climbs to highest since July 2020, stocks hit record

The rouble gains are, however, limited by geopolitical frictions between Moscow and the West. Russia said on Monday it would halt the activities of its diplomatic mission to NATO after the Western military alliance expelled eight Russians accused of spying.

"We see more robust currency strengthening only if geopolitical risk moderates meaningfully from current levels," Citi Bank analysts said in a note.

Brent crude oil, a global benchmark for Russia's main export, was up 0.5pc at $84.77 a barrel, recouping earlier losses, as falling temperatures in China, the world's biggest energy consumer, revived concerns about its ability to meet heating demand needs amid power and coal shortages.

Russian stock indexes were mixed.

The dollar-denominated RTS index rose 0.4pc to 1,883.6 points. The rouble-based MOEX Russian index was 0.1pc lower at 4,244.9 points, still near an all-time high of 4,292.68 it touched last week.