* Ruble hits 71.55 against dollar, strongest since July 2020
* The ruble crosses the threshold of 87 against the euro
* C.bank raises its key rate to 5.5%, as planned
* MOEX hits a record 3,849.32 points (Price update, adds quote from Nabiullina)
MOSCOW, June 11 (Reuters) – The Russian ruble strengthened to its highest level against the US dollar since last July on Friday after the central bank raised interest rates by 50 basis points, higher prices oil adding support.
The rate hike to 5.5% was expected by economists after high inflation in May prompted a large revision of forecasts, and central bank governor Elvira Nabiullina said the move was already embedded in the Change market.
Minutes after the central bank raised rates and signaled further hikes this year, the ruble hit 71.55, a level last seen on July 27. By 13:43 GMT, it had reversed to remain unchanged at 71.78.
“It now seems increasingly likely that there will be an additional 50 to 75 bps of increases, to 6.00 to 6.25%, by the end of the year,” Capital Economics said.
Against the euro, the ruble gained 0.4% to 87.01, earlier crossing the 87 threshold for the first time since March 17.
Higher rates support the ruble by making it more attractive for carry trades in which investors borrow low-yielding currencies, such as the US dollar, and convert them into rubles to buy high-yield bonds.
“Overall, the rate hike makes ruble assets more attractive,” Nabiullina said. “We don’t see any risk of large-scale carry trades here.”
The ruble, which was rocked by fears of further Western sanctions against Russia earlier this year, has recovered in recent weeks ahead of a meeting between US President Joe Biden and Russian Vladimir Putin on June 16.
The meeting is seen as a sign that further sanctions are not inevitable after the United States banned its banks from buying OFZ government bonds directly from Russia from mid-June.
Trading on Mondays will be slim due to a public holiday.
Brent crude oil, a global benchmark for Russia’s main export, rose 0.2% to $ 72.66 a barrel, heading for a third weekly increase.
Russian stock indices were also higher.
The dollar-denominated RTS index gained 0.5% to 1,686.1 and the Russian ruble-based MOEX index rose 0.4% to 3,841.6 points, earlier reaching an all-time high of 3 849.32 points. (Edited by Kirsten Donovan)