RUSSIA’S currency, the rouble, had a terrible 2014. As oil prices collapsed and Western sanctions bit, export revenues slumped. Nervous investors pulled $150 billion from the country. As a result, the rouble lost about half its value against the dollar (see chart). But over the past few months, it has climbed out of its trough. Russian bonds and stocks have done well, too. The Central Bank of Russia (CBR) has been cutting interest rates—an unthinkable prospect just a few months ago. On April 30th it lowered its main rate from 14% to 12.5%. All this, some say, is proof that investors are too pessimistic about the Russian economy. They are wrong. Oil prices have risen slightly since the start of the year. That is helpful for an economy where the stuff provides half of all exports. The cheaper rouble has buoyed exports, too. A new deal to end the Russian-backed insurgency in Ukraine, signed in February, has also made investors less jittery.

Nonetheless, the rouble’s strength is a puzzle, since in many ways the Russian economy looks worse than it did in December. Inflation, at 16.9%, is 5.6 percentage points higher, a jump that would normally spur depreciation. Real wages are tumbling fast. The foreign-exchange reserves of the CBR have fallen by about $30 billion so far this year, and by $130 billion since this time last year. The IMF thinks that the economy will shrink by 4% in 2015—and it is a relative optimist.

Economic fundamentals cannot explain the rouble’s strength, but the CBR’s behaviour may do. Last year, as the rouble collapsed, it launched a $50 billion scheme to lend dollars to companies at a concessionary rate. That was especially useful in December, when Russian firms faced a mound of debt repayments. This year Russian firms, with fewer foreign bills to pay, have used the cheap dollars to invest in much higher-yielding Russian assets, says Timothy Ash of Standard Bank. The effect has been to bolster the rouble and other Russian assets. On April 20th, however, the CBR put a stop to this “carry trade” by making the loans more expensive, halting the rouble’s appreciation.

What next for the volatile currency? Things do not look good. Russian firms still have around $100 billion of external debt maturing this year. Since the rouble remains weak, and their cash reserves have dwindled, repayment may be difficult. Wonks at Capital Economics, a consultancy, think that the Russian state will have to help out again. However, Anders Aslund of the Peterson Institute, a think-tank, estimates that the CBR only has about $150 billion of liquid foreign-exchange reserves at its disposal. Add in a big government deficit and high capital outflows, and within a few months reserves will be much lower. The Kremlin may then be tempted to try to pay off foreign debt by printing roubles to buy foreign currency. If that happens, expect much more upheaval.