MOSCOW: The Russian rouble strengthened against the US dollar and the Chinese yuan on Monday with analysts saying that the market is still adjusting to new US financial sanctions and is not likely to react to an expected key interest rate hike this week.

By 0930 GMT, the rouble was up 0.9% at 104.50 against the dollar, according to over-the-counter market data from banks.

The rouble strengthened by 0.4% to 13.81 against the yuan in trading on the Moscow Stock Exchange.

The Russian central bank is set to raise its benchmark interest rate by another 200 basis points to 23% at its Dec. 20 board meeting, according to a Reuters poll of analysts, to fight inflation.

“The rouble’s volatility remains a direct consequence of external factors. The expected increase in the key rate is unlikely to have a noticeable impact on the rouble,” said Vladimir Evstifeev from Zenit Bank.

Russian rouble flat against dollar

The US sanctions, imposed on Nov. 22, hit Gazprombank, Russia’s third-largest lender, which handles payments for energy trade with Europe, disrupting foreign trade transactions and the supply of foreign currency to the Russian market.

The rouble lost up to 15% against the dollar after the sanctions but it then recovered much of those losses. One-day rouble/dollar futures, which trade on the Moscow Stock Exchange and are a guide for the over-the-counter exchange rate, were flat at 102.92.

The Russian central bank set an official exchange rate at 103.43 to the dollar.

One of Russia’s richest businessman, Vladimir Potanin, CEO of nickel and palladium producer Nornickel, said in an interview with RBC television on Dec. 14 that an exchange rate of 100 to 105 roubles to the dollar was justified.

“An exchange rate of 100 to 110 roubles per dollar, I believe, is something quite economically justified, something the country can live with. It is a kind of balance between budgetary interests and the interests of exporters,” he said.