May 17, 2022 04:26AM ET
By: AnalysisWatch
The Russian rouble weakened on Tuesday, moving away from five-year highs against the euro, after the central bank relaxed some capital controls that have been the main reason for its strength in recent weeks.
The rouble has become the world's best-performing currency this year despite a widespread economic crisis, although this is due to the artificial support provided by the controls Russia put in place in late February to protect its financial sector after sending tens of thousands of troops into Ukraine.
At 0741 GMT, the rouble was 0.7% weaker at 63.89 against the dollar, moving away from Friday's level of 62.6250, the highest since early February 2020.
Against the euro, the rouble fell 1.1% to 66.50, settling near its highest level since mid-2017 of 64.9425, reached last week.
The rouble pared gains after the central bank raised the cap on cross-border transactions, allowing Russian residents and non-residents of friendly countries to transfer foreign currency equivalent to $50,000 a month abroad, up from the previous limit of $10,000.
The central bank's decision is unlikely to immediately change the balance of power in the market, where export-oriented companies have to convert 80% of their earnings, as the central bank cannot intervene directly after the West froze about half of its gold and foreign exchange reserves.
However, the central bank's latest move can be seen as an indication that the ruble's recent rally phase may soon come to an end, according to BCS Brokerage.
On the stock market, the dollar-denominated RTS index lost 0.2% to 1,171.6 points, while Russia's ruble-based MOEX index gained 0.5% to 2,377.6 points.