The ruble extended its recent rally on Thursday and analysts forecast more of the same unless the Central Bank steps up interventions or administers sharp interest rate cuts.
Russia's currency boosted gains to 5 percent over the past seven weeks, hitting fresh 14-month highs against a basket of currencies and fuelling concerns that its swift rise could hurt Russia's nascent economic recovery, prompting speculation of more action from the authorities.
"The market seems to have become a one-way street with investors selling dollars heavily into the Central Bank and local rates plummeting," BNP Paribas said in a note.
Officials have not commented on the currency this month, and the Central Bank has not stepped up its interventions, sticking to a policy of shifting the ruble's trading band in small increments, with a view to slowing down excessive forex moves without stifling market trends altogether.
"The Central Bank has not changed the tactics of interventions — buying $700 million before retreating by 5 kopeks," UralSib analysts said in a note.
In its 14th such move since mid-February, the Central Bank shifted the floating trading band to 34.30 to 37.30 rubles against the basket on Thursday from 34.35 to 37.35, dealers said.
A trader at a major foreign bank in Moscow forecast that the ruble could strengthen to 34.20 against the basket in the near future.
The rally has been fanned by a surge in oil prices, attractive yield differentials and increasing investor appetite for emerging markets in the face of worries about the health of some developed European economies.
Month- and quarter-end domestic tax payments, starting next week, are expected to further boost the ruble.
In addition to making greater interventions, the Central Bank could step up the pace of interest rate cuts in a bid to slow down the ruble's rally by reducing its yield appeal. It is due to meet on rates sometime this month but had not given a date.
Against the dollar, the ruble firmed to a 7 1/2-week high at 29.47 per dollar and hit 40.23 per euro, its strongest since December 2008.