April 14 Reuters Russias rouble extended strong gains on Wednesday on hopes of improving ties between Moscow and the West, while other emerging market currencies rose as U.S. inflation data failed to stoke fears of imminent policy tightening.

The rouble led gains across currencies in Europe, the Middle East and Africa, having surged 1.8 on Tuesday after a phone call between U.S. President Joe Biden and Russian President Vladimir Putin, which the Kremlin said was a proposal to normalise ties.

This comes in the wake of simmering tensions over eastern Ukraine, which had pushed the rouble to five month lows recently.

It would be premature to claim that risk perceptions ought to subside… while the Biden administration was always viewed as potentially more hawkish towards Russia than its predecessor, the timeframe has been shortened, analysts at Commerzbank said.

Had things not escalated around Ukraine, Bidens Russia policy might have taken longer to be fleshed out. Now the prospect of concrete action has, indeed, drawn nearer.

The MSCIs index of emerging market currencies rose 0.3, with the dollar hitting three week lows after an uptick in U.S. inflation did not spark wider fears about accelerating inflation and the Federal Reserves tapering, pushing down U.S. bond yields.

Higher U.S. yields had weighed on emerging market currencies and debt this year, as investors bet on a swift U.S. economic recovery prompting rate hikes by the Fed.

But even as fears of a hawkish…