The Russian ruble has wiped out almost all the losses suffered after Vladimir Putin’s invasion of Ukraine, as Moscow imposed tough capital controls and prevented most foreign traders from exiting their investments.

The currency’s rebound showed how Moscow has managed to fend off the collapse of the country’s financial system, but at the cost of further isolating Russia from global finance and fueling a strong economic pullback.

In early March, the ruble plummeted to $150 against the dollar after U.S. and European sanctions took Russia out of global payments systems and froze a significant portion of more than $600 billion in funds – in less than two weeks. It has lost nearly half of its value over time. Accumulated by the country’s central bank. “As a result of our unprecedented sanctions, the ruble was turned into rubble almost immediately,” President Joe Biden said during a visit to Poland last week.

The currency has risen sharply since then, trading at 81.7 against the dollar on Thursday, roughly in line with February 23, the day before Vladimir Putin sent troops into Ukraine.

Oil and gas revenues help stabilize the ruble as exports continue to flow to Europe. But Moscow Exchange’s supervisory board chairman and former central bank deputy governor Oleg Vieukin said the tight restrictions Moscow has put in place to shore up the value of the ruble are crucial to averting a deeper currency crisis.

“There was a moment in the beginning when the ruble fell sharply . . . when many citizens moved their funds abroad,” Vieukin said. “But then an embargo was imposed on it, making it almost impossible to use the dollar at home or abroad.”

Russians are banned from transferring funds to their foreign bank accounts, withdrawing more than $10,000 in international currency over the next six months, or taking more than that amount of cash out of the country. Banks and brokers have also been temporarily banned from operating cash-based foreign exchange transactions in dollars and euros.

central bank also more than doubled Interest rates fell to 20 percent, incentivizing people to save rubles instead of selling them for foreign currency. The measure prevented a bank run and preserved the integrity of the Russian banking system. Foreigners are also barred from exiting local stocks, leaving their investments in limbo.

“The authorities have managed this matter so tightly, I don’t think these levels reflect the Russian economy or the effectiveness of sanctions,” said Cristian Maggio, head of emerging markets portfolio strategy at TD Securities.

Foreign investors, many of whom are effectively trapped in holding Russian assets, cannot trade in this market, and banks outside Russia have largely stopped quoting the dollar-ruble rate, Maggio said. “The offshore market simply doesn’t exist,” he said.

Nonetheless, the sanctions actually enhance one of the traditional strengths of the Russian economy: a trade surplus. Soaring energy prices combined with a sharp drop in imports have created a “very strong trade balance, and a huge excess of currency in the trade balance,” Vieugene said.

IIF economists Elina Ribakova and Robin Brooks added that oil sales account for around 30% of Russia’s fiscal revenue, and the current global price hike “provides Russia with its strongest terms of trade since ‘peak oil’ in 2008”. “So even if Russia now reduces oil shipments due to Western sanctions, Putin will still get a lot of hard currency inflows.”

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Rybakova predicted that Russia’s current account could rise from about $120 billion in 2021 to $200 billion to $250 billion in 2022, due to plunging imports and strong commodity exports. The revenue means Russia can rebuild central bank reserves frozen by sanctions in more than a year, she said.

Companies that earn earnings in foreign currencies — mostly oil and gas exporters — are also forced to convert 80 percent of those earnings into rubles, effectively outsourcing the work of supporting the currency to the private sector.

In the two working days after the invasion, the Russian central bank spent a relatively modest $1.2 billion propping up the ruble, according to its own data, and has not intervened in currency markets since then. Analysts also said Putin’s plan to force European gas buyers to pay in rubles could further boost the ruble.

Still, the currency’s relative strength may have masked the severe damage the sanctions are expected to inflict on the Russian economy.

The IIF’s Ribakova estimates that Russia’s economic output will shrink by 15% this year as domestic demand collapses, erasing 15 years of growth – which could be worse if further sanctions are imposed on oil and gas exports contraction.

She said more than 400 foreign companies have withdrawn from Russia, many of which “sanctioned themselves” by withdrawing from Russia, even though the sanctions did not strictly require them to do so.

“The exchange rate is part of a political effort to suggest sanctions are ineffective,” said Timothy Ash, an economist at BlueBay Asset Management. “But it’s not a real market. Today, tomorrow or next year, wherever the ruble is traded, Putin has turned Russia into an international pariah.”