THE ruble hit its highest levels in two weeks Tuesday, shored up by informal capital control measures designed to head off a repeat of the inflation and protests that marked Russia’s 1998 financial crisis.

    The government set limits on net foreign exchange assets for state-owned exporters, while officials and banking sources said the central bank had installed supervisors at the currency trading desks of top state banks.

    Economists said the measures were effectively a softer version of capital controls, but that President Vladimir Putin, who has drawn much of his popularity from financial stability and rising prosperity, would keep his pledge not to resort to full-fledged controls.

    “They have already forced government exporters to sell their dollars, and same will happen for banks I guess, so in a sense, capital controls are already in place,” said Sergei Guriev, an exiled economist who fled Russia after criticizing the Kremlin.

    Russians are no strangers to currency crises, having seen hyperinflation destroy their savings after the collapse of the Soviet Union, before Putin came to power.

    The ruble plunged to an all-time low in mid-December on the back of lower oil prices and Western sanctions, which make it almost impossible for Russian firms to borrow from the West.

    Prime Minister Dmitry Medvedev said Tuesday that Russia risks deep recession. Standard and Poor’s ratings agency said it was putting the country’s credit outlook on creditwatch with negative implications, a warning of a possible downgrade.

    “The creditwatch placement stems from what we view as a rapid deterioration of Russia’s monetary flexibility and the impact of the weakening economy on its financial system,” the agency said.(SD-Agencies)