MOSCOW: The Russian rouble firmed to a more than one-week high against the dollar on Tuesday, extending strong gains from the previous session, supported by easing demand for foreign currency as the market looked ahead to Friday’s expected interest rate hike.

Most analysts polled by Reuters expect Russia to raise interest rates by 100 basis points to 16% on Dec. 15.

Inflation pressure exacerbated by labour shortages and lending growth is expected to force the central bank to extend its monetary tightening cycle to one last hike.

At 0734 GMT, the rouble was 0.3% stronger against the dollar at 90.42, its strongest since Dec. 4.

It had gained 0.2% to trade at 97.53 versus the euro and firmed 0.2% against the yuan to 12.59 .

“During the session, the rouble may try to build on its success against the backdrop of recovering prices for oil and intensified FX sales by exporters,” Banki.ru Chief Analyst Bogdan Zvarich said.

Brent crude oil, a global benchmark for Russia’s main export that slumped to a more than five-month low last week, was up 0.7% at $76.53 a barrel.

Russian rouble strengthens towards 91 vs dollar

The rouble weakened in early December after the passing of a favourable month-end tax period that usually sees exporters convert foreign exchange revenues to pay local liabilities.

It had previously registered seven weeks of gains, rebounding from more than 100 to the dollar thanks to reduced capital outflows since Russian President Vladimir Putin’s October introduction of forced conversion of some foreign currency revenue by exporters.

The market is also likely to pay close attention to a speech by Putin on Thursday. Putin, who last week said he would run again for election next year, faces numerous economic challenges, but the West’s limited success in imposing an oil price cap is easing pressure for now.

Russian stock indexes were mixed. The dollar-denominated RTS index was up 0.6% to 1,053.8 points.

The rouble-based MOEX Russian index was 0.1% lower at 3,024.4 points.