Russia believes it has dodged a financial crisis as its currency rallies and economic data improves.
The Russian ruble has gone from an all-time low in March to the world's best performing currency this year, as inflation in the country is running hot.
Russia has so far avoided default on its foreign currency debt despite Western sanctions because of improving economic activity indicators.
Russian inflation came in at a two-decade high of 17.8% in April, up from 16.7% in March, but price rises are beginning to show signs of slowing. Consumer price growth slowed from 7.6% in March to 1.6% in April, and non-food goods prices increased by just 1%.
The market expects the Central Bank of Russia to cut its interest rate by 200 basis points in June.
The country's key interest rate was raised from 9.5% to 20% in late February in order to save the ruble. The central bank was able to move the rate to 14% as the outlook for inflation and the currency improved.
Liam Peach wrote in a note last week that the inflation figures would support the central bank's assessment that the crisis has passed.
It is possible that consumer prices rise by less than 1% m/m in May as a whole and that headline inflation ends up peaking at just below 20% later this year.
The steep appreciation of the ruble reduces import prices.
The ruble was trading at just over 62 to the dollar as of Tuesday morning in Europe, having plunged to an all-time low of 150 to the dollar on March 7, following the announcement of a suite of international sanctions in response to Russia's invasion of Ukraine.
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Despite the dollar's broad strength, it is down almost 17% against the Russian currency this year, due in part to its perceived safe-haven status.
Strict capital control measures from Russia's central bank, which include ordering companies to convert 80% of their foreign currency revenues into rubles, have helped revive the ailing currency. Russian citizens are not allowed to transfer money abroad until the end of 2022, and transfers are limited to $10,000 per month for individuals.
The Russian economy has recovered from the initial shock of late February and early March, according to a note from Goldman.
Moscow's actions to defend its currency are considered to be manipulation by many analysts, in that demand has been created that would not otherwise exist and capital controls have effectively turned the ruble into a managed currency.
Charles-Henry Monchau, chief investment officer at Switzerland-based Syz Bank, said that while the Russian central bank has deployed a range of tools to make the ruble look valuable, very few people outside Russia want to buy a single ruble.
If Russia succeeds in finding a solution to the Ukrainian problem, the ruble can potentially retain its current value.
If the measures are withdrawn without a resolution, the ruble could collapse, causing an explosion of domestic inflation and a deep economic recession in Russia.
Russia has taken other measures to shore up its currency. The gold purchases on the domestic metals market were resumed by the CBR in order to protect Russian wealth against inflation in the event of a further shock to foreign exchange liquidity.
The Bank of Russia resumed gold purchases at a fixed price of 5,000 rubles per gram between March 28 and June 30.
Monchau said that the ruble can be linked to gold and the floor price can be set in dollar terms. Russia has been accumulating gold rapidly since its annexation of the peninsula of Crimea, and a further rise in the ruble could increase the price of gold.
Further protection for the Russian economy is offered by the move, as well as the fact that the country's foreign currency reserves are at risk of being used to service dollar-denominated debts.
Economic indicators are showing some improvement.
April's figures rose to 48.2 after falling from 48.6 in February to 44.1 in March. Improved output and shorter suppliers were some of the reasons for this.
Russian financial conditions have improved mostly on the back of a narrowing of the credit default swap spreads.
After a 30-day grace period, Russia made payments to holders of two dollar-denominated Russian bonds, worth a collective $650 million. There is a high probability of a Russian default within the next two years, according to analysts.
The improvement in the data has led Russian President Vladimir Putin to claim that the West is planning a war.
The long-term outlook is less optimistic as the effects of the sanctions and the economic collapse in Russia are still being felt.
A survey by the Central Bank of Russia shows that many businesses are having trouble getting goods into the country.
The survey found that some companies were forced to suspend factory operations due to the shortage of raw material.
Elina Ribakova, deputy chief economist at the Institute of International Finance, told the BBC last week that economic indicators would not mean much to those on the ground.
She told Grid News in a separate interview this week that the Russian economy will be affected by companies running out of parts or equipment and having to lay people off or put them on leave.