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The Russian rouble strengthened to a near two-week high against the dollar on Tuesday, buoyed by subdued imports and hopes for a resolution to the war in Ukraine, even as Kyiv launched its biggest drone attack on Moscow.
Ukraine's attack, which saw at least 91 drones target the Russian capital, sparked fires, closed airports and forced dozens of flights to be diverted, Russian officials said.
By 0807 GMT, the rouble was up 0.9% at 86.80 to the dollar in over-the-counter market trade, its strongest level since February 27. Against the Chinese yuan, the most traded foreign currency in Russia, the rouble was down 0.1% to 11.89.
The rouble is up against the dollar this year, mostly thanks to expectations of improved relations between Moscow and Washington that could produce some conflict resolution in Ukraine and the possible easing of sanctions against Russia.
The rouble brushed aside U.S. President Donald Trump's threat last week of imposing banking sanctions on Russia to force it to the negotiating table and was unmoved by Ukraine's drone bombardment on Tuesday.
Strong exports, subdued imports and the geopolitical risk premium is keeping the national currency from devaluation, said BCS World of Investments analysts.
"The national currency's exchange rate can only devalue if negotiations are disrupted without prospects for their resumption, but this is not the baseline scenario," they said.
Brent crude oil, a global benchmark for Russia's main export, was up 0.3% at $69.49 a barrel.
(Reporting by Alexander Marrow, Editing by Louise Heavens)