By Andrey Ostroukh

MOSCOW, May 14 (Reuters) – Russia, worried that the rallying rouble will hurt the economy, is moving to discourage inflows of hot cash and cap foreign borrowing, but without full scale capital controls they will at best slow down the appreciation.

Adjusted for inflation, the Russian rouble is already back to pre-crisis levels while gross domestic product (GDP) is not expected to recover to such a point until at least 2012.

Discussions on capital controls in Russia intensified after the International Monetary Fund urged Moscow to be ready to guard against excessive capital inflows and consider a range of measures, not excluding capital controls. [ID:nLDE64A0QV]

Last year emerging peer Brazil, in an effort to control hot money flows, began to tax some share trades involving Brazilian companies and new foreign purchases of local equities and bonds.

“We believe that some form of (Russian) capital controls may be inevitable at some point later this year, but they are likely to be targeted and not necessarily broad-based,” RBC said in a note to clients, calling capital controls a “divisive issue”.