The rouble extended losses on Tuesday to hit two-week lows after the Russian central bank moved to curb its recent gains while improving growth prospects boosted Central European markets despite worries over a Greek default.

The rouble fell 1 percent against the dollar, adding to the previous session’s 3 percent loss after the central bank on Monday raised the cost of hard currency repos for the second time this month.

Tatiana Orlova, senior economist for Russia at RBS, said the repos, originally intended to help companies repay maturing external debt, had instead fuelled a rally on Russian bonds and the rouble. Until late last week, the rouble had risen for five straight weeks to the highest since November.

“It wasn’t the central bank’s intention that this money should be used for speculation on bonds. Now it has given a signal. For now the hiking has done the job and the rally has lost steam,” Orlova said.

“At current oil prices, the rouble should be within 55-60 per dollar despite cheap liquidity,” she added.

Russian dollar-denominated stocks slipped while local 10-year bond yields rose to the highest since April 10 .

Commerzbank predicted that the rouble would weaken, saying that the move “pushes more persons and companies to look for dollars on the market rather than from the central bank, thus placing more selling pressure on the rouble.”

Ukraine’s state-run Ukreximbank’s bond maturing 2015 rose 0.725 cent to a two-month high after it proposed a seven-year maturity extension and raising the coupon to 9.625 percent.

“It’s a fairly benign proposal for bondholders, pointing towards recoveries perhaps 40-45 percent higher than for the sovereign,” said Richard Segal, emerging markets analyst at Jefferies.

Central European stocks rallied further as fears of an imminent Greek debt default and exit from the euro zone were overshadowed by their own improving economic growth prospects.

The Athens bourse fell 3 percent but Warsaw rose 0.7 percent and Hungary was up 1.8 percent.

On currencies the Polish zloty touched a new 3-1/2 year high, after data on Monday hinted at continued economic recovery

The forint too firmed before a central bank meeting that may cut rates by 15 basis points, as authorities try to curb currency strength.

Egyptian stocks and debt insurance costs showed little reaction to a court judgement sentencing former President Mohamed Mursi to 20 years in prison.

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