MOSCOW (Reuters) – The rouble pared early losses in volatile Moscow trade on Monday as Russia looked set for its first sovereign default in more than a century after a payment deadline expired and the West promised more actions against Moscow over the Ukraine conflict.

A 30-day grace period for bondholders to receive $100 million interest payments due on May 27 expired on Sunday. The Kremlin rejected the default on Monday, while the Russian finance ministry blamed Western clearing houses.

Russia has long said it has the money to pay, calling the default artificial as sanctions block foreign bondholders from receiving the cash.

By 1107 GMT, the rouble was 0.3% stronger against the dollar at 53.23, paring losses, having earlier shed as much as 2% to touch its weakest since June 21 at 54.4975.

The rouble will be likely to stay in the 50-55 range versus the dollar in the coming weeks and may test the lower boundary of that range, Dmitry Polevoy, head of investment at Locko Invest said in a note.

The rouble had gained 0.2% to trade at 55.96 versus the euro, also paring early losses that had seen it drop to 57.3375.

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

The strong rouble squeezes the incomes of export-focused companies and could weigh on the economy as it tips into recession following harsh sanctions over what Moscow calls a “special military operation” in Ukraine.

The Group of Seven rich democracies will commit on Tuesday to a new package of coordinated actions meant to raise pressure on Russia over the conflict in Ukraine, a senior U.S. official said on Monday, which analysts said could put downward pressure on the currency.

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Capital controls have buttressed the rouble for months, pushing it to seven-year highs on June 22.

This week’s peak of a month-end tax period that sees exporting companies convert dollar and euro revenue into roubles may add short-term support.

There was no increase in currency sales by exporters last week, said Alor Broker in a note, meaning they could have left the process of forex conversion until the last minute, which would see the rouble strengthen.

However, Alor said exporters may have already stockpiled the necessary rouble amounts.

On the bond market, yields on 10-year benchmark OFZ bonds, which move inversely with their prices, fell to 8.63%, their lowest since early 2022.

Russian stock indexes were firmer.

The dollar-denominated RTS index was up 0.7% to 1,424.4 points. The rouble-based MOEX Russian index was 0.6% higher at 2,406.7 points.

(Reporting by Reuters; editing by Barbara Lewis and Jane Merriman)