- Brent crude oil, a global benchmark for Russia's main export, was up 3.8% at $22.12 a barrel.
- Foreign investors are not yet ready to return to Russia on a large scale against the backdrop of global instability with oil prices and the coronavirus.
- Foreign currency sales also continued to support the rouble.
MOSCOW: The Russian rouble strengthened against the dollar on Friday after the central bank cut its key interest rate by 50 basis points to 5.5%, trimming the cost of lending amid an economic crisis triggered by the coronavirus epidemic.
The deeper than usual cut was in line with expectations of analysts polled by Reuters, with the country facing mounting economic challenges, exacerbated by low oil prices.
By 1113 GMT the rouble was up 1% at 74 to the dollar and was also up 1% at 79.81 versus the euro .
Brent crude oil, a global benchmark for Russia's main export, was up 3.8% at $22.12 a barrel.
The interest rate reduction and promise of further monetary easing could trigger a new round of volatility for the rouble, said Valentin Zhurba, head of investment at MKB Private Bank, warning that the currency's long-term prospects remain gloomy.
"Foreign investors are not yet ready to return to Russia on a large scale against the backdrop of global instability with oil prices and the coronavirus. As a result they will not yet be able to play a positive role in strengthening the rouble," he said.
Russia's 2020 gross domestic product (GDP) is forecast to decrease by 4-6%, the central bank said in a statement, adding that it would keep open the prospect of further rate cuts.
"The statement suggested that policymakers are becoming increasingly concerned about the hit to the economy from the efforts to contain the virus," Capital Economics' Liam Peach said in a note.
Central Bank Governor Elvira Nabiullina is due to hold a news conference at 1200 GMT.
Rate cut expectations and the rouble's appreciation after an oil price drop earlier this week have sent investors flocking to Russia's OFZ treasury bonds, with yields - which move inversely to their price - reaching a six-week low of 6.09%.
Foreign currency sales also continued to support the rouble.
The central bank sold foreign currency worth 23 billion roubles ($307.8 million) on Wednesday, data showed on Friday. This was the highest daily amount since it began the interventions in March.
Russian stock indexes were mixed.
The dollar-denominated RTS index was up 0.3% at 1,103.1 points while the rouble-based MOEX Russian index eased by 0.3% to 2,591.4 points.