MOSCOW - The rouble soared to its highest level in almost eight years against the euro on Friday, with investors worried that more sanctions against Moscow could limit foreign currency trading as Russia prepares to annex four Ukrainian regions.
The move is in violation of international law, according to the Western governments and Kyiv.
By 0929 GMT, the rouble had gained 6.5% to trade at 51.87 versus the euro, reaching 51.3100, its strongest point since mid October 2014.
It was 4.8% stronger against the dollar at 54.44, earlier touching its strongest point since July 1 of 54.1625.
Since Western sanctions were imposed over Russia's actions in Ukraine and companies leaving the market in droves, the rouble has been supported by capital controls and a collapse in imports. Geopolitical risks are elevated, with more U.S. and EU sanctions expected soon.
Some investors have been forced to reduce their holdings because of the sanctions threat, fearing that restrictions may affect Russia-based trading in the dollar, analysts said.
The situation with more sanctions expectations is noted in a note on Friday by Otkritie Research, aside from the impact of the trade balance. Companies could speed up the sale of foreign currency from overseas accounts. The rouble had lost 0.9% against the yuan to 8.194.
Geopolitical pressure sent the Russian index to its lowest since February 24 - the day Russia sent troops into Ukraine - on Monday, but the expected approval of energy giant Gazprom's dividend payments is a key factor in the market's success.
The approval of the payment should be positive for both the stock and the market as Gazprom has the largest weight in the indices, according to BCS Global Markets.
The rouble-based MOEX index was 0.3% higher at 1,959. 4 points. The dollar-denominated RTS index was up 5.5% to 1,131. 6 points.
Gazprom shares were underperforming the wider market, down 1.6%.