Russian exporters from key sectors have been ordered to sell their foreign currency revenues
Russian President Vladimir Putin signed a decree on Wednesday ordering exporters in key sectors of the economy to sell their foreign currency revenues, the Kremlin has announced. The regulation is intended to support the ruble, which has recently seen its value drop against major currencies.
The order covers 43 Russian exporters from the fuel and energy industries, black and non-ferrous metallurgy, the chemical and forestry industries, and grain farming.
Exporters will be required to repatriate and sell foreign currency proceeds on the Russian market. They will also have to submit indicative schedules for the purchase and sale of foreign currency to the Russian central bank and the Federal Financial Monitoring Service (Rosfinmonitoring). Authorized Rosfinmonitoring representatives will monitor compliance with the new regulations.
The measures will be in force for the next six months. The volume of earnings sales and the time frame for them will be announced later this week.
According to the decree, the regulations are intended to help stabilize the domestic currency. The ruble has been sliding against Western currencies for weeks, and on Monday dropped to 102 rubles to the US dollar, its lowest rate since March 2022. The Bank of Russia has attributed the slide to foreign currency outflows and a changing trade balance. The regulator welcomed Putin’s decree, noting that the measures could contribute to reducing volatility in the foreign exchange market.
“The requirement for repatriation and mandatory sale of foreign currency proceeds for 43 groups of companies may increase the speed with which the companies sell foreign currency, improve the situation with liquidity and contribute to the reduction of short-term volatility in the market. At the same time, the targeted nature of these restrictions will preserve the established schemes of foreign trade settlements,” the central bank said in a statement.
The ruble strengthened on the news of the new regulations, gaining nearly 4% to trade at around 97 rubles to the dollar at the opening of trade on the Moscow Exchange on Thursday. However, the Russian stock market reacted negatively to the measure, with the ruble-denominated MOEX index falling by 1.15% to 3,158 points. The dollar-denominated RTS index had risen by 2% to 1,025 points by 09:00 GMT.
Russia introduced similar measures last year to support the ruble amid Western sanctions. In February 2022, exporters were ordered to sell 80% of their foreign currency earnings. After the ruble strengthened, the requirement was eased to 50% and abolished entirely by June 2022.
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October 12, 2023 at 03:00PM