© Reuters. FILE PHOTO: A vendor counts Russian rouble banknotes at a market in Saint Petersburg, Russia July 9, 2023. REUTERS/Anton Vaganov/File Photo

By Alexander Marrow

(Reuters) – The Russian rouble strengthened past 95 to the dollar on Wednesday, one day after the central bank hiked interest rates to 12% at an emergency meeting and amid speculation over what other steps Russia may take to prop up its struggling currency.

Tuesday’s extraordinary rate meeting and 350-basis-point key rate increase came in response to the rouble plummeting past the symbolic 100 threshold against the dollar at the start of the week and a public call from the Kremlin for tighter monetary policy.

By 1430 GMT, the rouble was 2.7% stronger against the dollar at 94.43. It had gained 2.6% to trade at 103.22 against the euro and firmed 2.8% against the yuan to 12.88.

This week has seen some of the rouble’s most volatile trading all year. It reached a near 17-month low of 101.75 against the dollar on Monday and briefly traded at 92.60 on Tuesday morning, before closing at 97.09.

While it provided an instant reprieve, the rate hike will probably not be enough to halt the rouble’s slide, Western and Russian analysts generally agreed on Tuesday.

Five sources told Reuters on Wednesday that Russian authorities were discussing bringing back the compulsory sale of foreign currency revenues for exporters. One high-level source said the change could be made “at any moment”.

Two people said the mandated conversion of up to 90% of exporters’ foreign currency earnings was under discussion. A similar measure was adopted to stabilise financial markets shortly after Russia’s February 2022 invasion of Ukraine.

Aside from withdrawing its troops from Ukraine and reducing soaring military spending, Russia could try to buttress the rouble in other ways, although no option is particularly favourable.

, a global benchmark for Russia’s main export, was down 0.2% at $84.76 a barrel.

Russian stock indexes, in volatile trade for several sessions, were mixed.

The dollar-denominated RTS index was up 0.2% to 1,012.5 points. The rouble-based MOEX Russian index was 2.5% lower at 3,036.3 points.

“The positive reaction to the rate revision by the Bank of Russia was replaced with a correction, linked to regulator’s tighter rhetoric and expectations of capital control measures,” Sinara Investment Bank said in a note.