MOSCOW: The Russian rouble firmed against the dollar on Tuesday, while prices for OFZ government bonds rose to their highest since Feb. 21 on expectations that the central bank would soon cut interest rates again.

The rouble has fully recovered to levels seen before Feb. 24 when Russia sent tens of thousands of troops to Ukraine, triggering an unprecedented wave of western sanctions against Russia.

Now Russia faces soaring inflation and capital flight while grappling with a possible debt default, while movements in the rouble are artificially limited by capital controls that Russia imposed in late February.

The rouble ended Moscow trading 1.6% firmer against the dollar at 78.52, its strongest level since April 11.

Against the euro, the rouble eased 0.5% to 84.10 after on Monday briefly touching its strongest level since April 8 of 82.60.

On the bond market, where non-residents have not been allowed to sell paper since late February, yields on 10-year benchmark OFZ bonds fell to 10.25%, their lowest since Feb. 21, from around 11.6% seen a week ago. Yields move inversely with bond prices.

Central Bank Governor Elvira Nabiullina on Monday said the central bank should work on increasing the availability of credit for the economy, indicating that it would consider cutting its key rate from 17% at the next board meeting on April 29.

Nabiullina also warned that the Russian economy “will enter a period of structural transformation” in the second and third quarters, which analysts said meant a deep and rapid economic contraction.

In just two quarters, the Russian economy could shed all the gains it posted in 2012-2021, said Evgeny Suvorov, an economist at CentroCreditBank, predicting that the central bank would cut its key rate to 15% next week. Russian stock indexes were down.