The rouble firmed sharply in volatile trade on the Moscow Exchange on Monday, reversing some of last week’s heavy losses as it retained support from capital controls and Russia’s strong trade account.

The rouble plunged last week as the central bank slashed interest rates, signalling more cuts. The prospect of an easing of capital controls and a possible sovereign default added to downside pressure.

At 1120 GMT, the rouble gained around 7% to 61.92 to the dollar. Last Wednesday it had hit 55.80 to the dollar, its strongest level since February 2018, before falling to 66.70 by the end of the week.

Against the euro, the rouble firmed nearly 9% 63.46, having last Wednesday hit a seven-year high of 57.10, at the peak of month-end tax payments that usually prompt export-focused companies to convert foreign currency to meet liabilities.

“The overall fundamental picture for the rouble is not changing much … We’re not ruling out a return to levels of 60-63 to the dollar,” said Dmitry Polevoy, head of investment at LockoInvest firm.

Boosted by capital controls, the rouble had risen to become the world’s best-performing currency so far this year until last week’s slide. New gas payment terms for EU consumers that require conversion of foreign currency into roubles and a fall in imports have also supported the rouble.

Rouble extends losses after rates slashed; Eurobonds in focus

On the bond market, yields on the government’s 10-year OFZ treasury bonds, which move inversely with their prices, briefly fell to 9.23%, their lowest since Jan. 19, before settling at 9.48%, as the market priced in the central bank’s rate cut and expectations for more monetary easing.

Market eyes are focused on Russia’s ability to service its foreign debt after the United States pushed it to the brink of a historic debt default by not extending its licence to pay bondholders, as Washington ramps up pressure following what Russia calls a “special military operation” in Ukraine.

Russia plans to settle its Eurobond obligations using a mechanism similar to the scheme used to pay for Russian gas in roubles, Finance Minister Anton Siluanov told the Vedomosti daily.

Russian stock indexes were mixed.

The dollar-denominated RTS index rose 7.7% to 1,221.2 points. The rouble-based MOEX Russian index was 0.9% lower at 2,386.8 points, pressured by the rouble’s recovery.