The Central Bank allowed the ruble to hit an 11-month peak against the dollar on Wednesday, just a day after warning market participants against one-way bets on continued appreciation of the currency.
The ruble has rallied 11 percent versus the dollar since the start of September, propelled by one-year highs in oil prices, returning investor appetite for emerging markets and signs that the country is recovering from its first recession in a decade.
The Central Bank has regularly intervened to slow down the rally. But as part of a policy to gradually move towards a free-floating exchange rate, it has not halted the ruble's progress altogether.
The ruble strengthened as far as 35.12 versus the Central Bank's euro/dollar basket on Wednesday, moving beyond the 35.15 mark seen as the previous intervention level .
"Looks like the Central Bank is at 35.10. I think [they bought] around $700 million or a bit more," said Darya Dushutina, dealer at Nomos Bank.
Against the dollar, the ruble firmed to 28.63, its strongest since last December .
The ruble's gains come a day after the Central Bank cautioned financial markets against one-way bets on the ruble's strength, suggesting that investors were paying little heed to the warning.
VTB Capital's analysts described the Central Bank's comments as "verbal intervention against the ruble carry trade."
Russia has cut rates by 350 basis points since April, but at 9.50 the benchmark refinancing rate still offers very attractive yield against rates of 1 percent or less in the major Western economies.
Senior Central Bank official Sergei Shvetsov said on Tuesday that further rate cuts and expected large injections of liquidity from budget coffers towards the end of the year could change the ruble's trajectory.
But investors were unconvinced, with VTB Capital predicting that the extra cash from the budget would "spill over into asset price inflation rather than lead to ruble depreciation if oil prices stay high."
Urals Crude traded at $76.5 a barrel on Wednesday, off recent one-year peaks but still nearly $20 stronger than the price factored into this year's budget .
Nondeliverable forwards, a barometer of market sentiment, put the ruble at 30.44 per dollar in 12 months, implying only a small weakening from current levels and showing that investors are at their most optimistic on the currency in nearly a year.
"Good luck to them [in trying to turn around the ruble]. The inflows are overwhelming and it's not just hot money," said Elina Ribakova, analyst at Citi.
"At these levels, investor sentiment is very positive and at this level of nominal interest rate differential they are bound to remain very positive."