April 20 Reuters The Russian rouble firmed towards 78 to the dollar in early trade on Wednesday, while stock indexes extended losses as the market watched developments around Ukraine and sanctions against Russia.

Russia faces soaring inflation and capital flight while grappling with a possible debt default after the West imposed harsh sanctions against Moscow for sending tens of thousands of troops into Ukraine on Feb. 24.

As of 0729 GMT, the rouble gained 0.5 to 78.15 to the dollar , hovering near levels seen before Feb. 24.

Against the euro, the rouble added 0.3 to 83.83 , heading away from an alltime low of 132.41 it hit on the Moscow Exchange on March 10.

Movements in the rouble are artificially limited by capital controls that Russia imposed in late February.

On Tuesday, the central bank slightly relaxed capital controls for exportfocused companies outside the commodities and energy sectors, extending the deadline by which they need to convert foreign currency to roubles to 60 days from three days. 

The central bank move could result in a slight decline in market activity, but excessive FX supply remains in place and the rouble can firm past 78 to the dollar, Promsvyazbank analysts said in a note.

The rouble will also see support from tax payments as companies are due to pay a record 3 trillion roubles 37.40 billion in taxes this month, for which some exportfocused companies need to sell foreign currency, according to analysts surveyed by Reuters.

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