MOSCOW (Reuters) – The Russian rouble weakened against the dollar on Thursday but hovered not far from seven-year highs, supported by capital controls and the prospect of a favourable upcoming tax payment period as the spectre of a possible default loomed large.

President Vladimir Putin signed a decree on Wednesday to establish temporary procedures aimed at fulfilling Russia’s foreign debt obligations as the country teeters on the brink of default.

At 0731 GMT, the rouble was 0.4% weaker against the dollar at 53.36, but remained near its strongest mark since June 2015 of 52.80, hit on Wednesday.

It had gained 0.7% to trade at 56.01 versus the euro, close to a more than seven-year high of 55.01 hit in the previous session.

The rouble, which has become the world’s best-performing currency this year, is driven by Russia’s high proceeds from commodity exports, a sharp drop in imports and a ban on households withdrawing foreign currency savings.

Top policymakers used Russia’s annual economic forum in St Petersburg last week to highlight the rouble’s recent strength. There are concerns this could weigh on the economy as it tips into recession amid harsh sanctions over what Moscow calls a “special military operation” in Ukraine.

The rouble is also buttressed by companies that need to pay taxes early next week. For export-focused firms that means converting dollar and euro revenue into roubles.

Trading patterns suggest that exporters have not yet actively started selling foreign exchange in preparation for those payments, Alor Broker said in a note, meaning the rouble still has room to strengthen and could reach 50 to the U.S. currency as early as this month.

Russian stock indexes were steady.

The dollar-denominated RTS index was down 0.1% to 1,402.2 points after clipping a more than four-month high in early trade. The rouble-based MOEX Russian index was steady at 2,374.4 points.

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(Reporting by Reuters; Editing by Emelia Sithole-Matarise)