May 5 Reuters The Russian rouble briefly reached its highest level against the U.S. dollar since March 2020 on Thursday, supported by capital controls, while stock indexes also climbed as the market watched developments around possible new sanctions against Moscow.

The volatile currency hit a high of 65.31 per dollar in early trading on the Moscow Exchange but by 0716 GMT was at 66.60, which was 0.4 lower than its Wednesday closing level.

The morning peak level had not been seen since the onset of COVID19 pandemic.

The rouble has rallied in the past few weeks thanks to mandatory conversion of foreign currency by exportfocused companies. Also, there has been weak demand for dollars and euros amid waning imports and restrictions on crossborder transactions.

Moves in the rouble are sharper than usual as market liquidity has been thinned by central bank restrictions designed to prop up financial stability after Russia sent tens of thousands of troops into Ukraine on Feb. 24.

Against the euro, the rouble was 0.3 stronger at 70.20 , hovering at levels last seen in February 2020.

Proposals for new sanctions against Russia, including an oil embargo, were in focus as the West sought to deepen Moscow39;s isolation. 

The rouble showed little reaction to the U.S. Federal Reserve39;s move to raise its benchmark overnight interest rate by half a percentage point, the biggest jump in 22 years. 

Direct impact of U.S. monetary policy on the Russian market was distorted by…