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The Financial Times: The Russian rouble has risen by 4% against the dollar after the Kremlin reintroduced capital controls, the first time since the aftermath of Russia’s invasion of Ukraine. President Vladimir Putin signed a decree requiring 43 major companies from sectors like energy, metals, and agriculture to sell a portion of their foreign currency revenue domestically to support the weakening rouble. Although the rouble experienced an uptick, it is still down by 23% against the dollar this year, largely due to western sanctions following the invasion of Ukraine which heavily impacted Russia’s economy. These sanctions decreased Russia’s export revenues and increased its budget deficit. In 2022, the Russian authorities had previously imposed currency controls after the invasion, with varying percentages of foreign revenue sales requirements over time. Efforts to strengthen the rouble in August through rate hikes and informal pressures on exporters were unsuccessful, leading Putin to express concerns over inflation caused by the weakening currency.
Analysts believe that mandatory sales will be effective if applied to major exporters. The central bank, previously against new capital controls, commented that this measure would aid in reducing volatility and enhancing liquidity in the currency market. Details of the decree remain private, but it emphasizes the compulsory repatriation of revenue based on a specified schedule. The government aims to increase transparency and reduce currency speculation opportunities through these measures. Additionally, Russia’s commodities exporters have shown discontent over attempts to augment budget revenue via interim solutions.
The entire article can be read at the link https://www.ft.com/content/6aa50bfc-359c-49b7-8561-9bdc268abb61
