UPDATE 1-Russian rouble firms to early 2020 levels near 65 vs dollar

Adds detail, updates prices

May 12 (Reuters) – The Russian rouble firmed on Thursday, crossing the 70 mark against the euro and heading towards 65 against the dollar as it retained artificial support from capital controls.

The rouble has become the world’s best-performing currency this year with support from capital controls that Russia imposed to shield the financial sector in late February after Moscow sent tens of thousands of troops into Ukraine.

At 1003 GMT, the rouble gained more than 2% to 65.58 against the dollar RUBUTSTN=MCX after briefly touching 65.0625, a level last seen in late February 2020.

Against the euro, the rouble firmed more than 3% to 68.28 EURRUBTN=MCX, having earlier hit 67.85, its strongest level since January 2020.

The rouble could firm to 65 to the dollar during the day, Promsvyazbank said in a note.

The rouble is driven by export-focused companies that have to convert their foreign currency revenues, while demand for foreign exchange is limited as imports into Russia have waned amid disruption in logistics and sweeping Western sanctions.

In the longer run, the rouble may see some downside pressure mounting from an increase in imports after Russia allowed so-called parallel imports of goods, analysts say.

Last week, Moscow published a list of goods from foreign carmakers, technology companies and consumer brands that the government has included in a “parallel imports” scheme aimed at shielding consumers from business isolation by the West. nL5N2WY56S

Russian stock indexes were mixed. The dollar-denominated RTS index .IRTS rose 0.7% to 1,132.6 points. Its rouble-based peer MOEX .IMOEX was 1.4% lower at 2,354.8 points.

Shares in Russia’s second-largest oil producer Lukoil LKOH.MM fell 1.8% on the day after the company said it will buy Shell’s SHEL.L Russian retail and lubricants businesses. nL3N2X42CT

For Russian equities guide see RU/EQUITY

For Russian treasury bonds see 0#RUTSY=MM

(Reporting by Reuters;
Editing by Robert Birsel and Bernadette Baum)