Exporters in Russia have reportedly agreed to increase the sale of their foreign currency earnings in an effort to prevent the depreciation of the ruble. According to Vedomosti, the Russian authorities have decided not to impose stricter capital controls in exchange for this concession from exporters. The decision was made during a meeting between President Vladimir Putin, Bank of Russia Governor Elvira Nabiullina, Finance Minister Anton Siluanov, and other senior officials.
The Russian Cabinet of Ministers informally reached a deal with the country’s leading exporters, who committed to boosting the sale of their forex earnings. As a result, the authorities have chosen to monitor exporters for now, rather than implementing tighter capital controls. However, sources warn that if exporters do not fulfill their promises, mandatory sales of export proceeds will become inevitable.
These discussions come against the backdrop of the recent decline in the value of the Russian ruble against major Western currencies. On Monday, the ruble experienced its largest drop in 16 months, weakening to 101 against the dollar and 111 against the euro. Analysts have attributed the ruble’s depreciation, in part, to the low volume of foreign exchange revenue sales by exporters.
According to the Bank of Russia, the proceeds from these sales have been significantly lower this year compared to 2022. In July, for example, the sales amounted to $6.9 billion, down from $16.8 billion in the same month last year. The oil sector has been forced to sell most of its export revenues due to tax obligations, but fertilizer exporters have reportedly neglected to repatriate their proceeds.
Strict capital controls were implemented in the spring of 2022 after the ruble collapsed under Western sanctions. Initially, these measures required the mandatory sale of 80% of forex earnings. However, as the economy adjusted to operating under sanctions and the ruble began to recover, the Bank of Russia gradually eased the requirement to 50% and eventually abolished it altogether.
If the ruble’s position does not improve by Friday, reports suggest that exporters may be compelled to return up to 90% of their forex revenues to Russia. As of Thursday, the ruble was trading at around 93 against the dollar and 101 against the euro.
The ongoing efforts to stabilize the ruble and prevent its further depreciation reflect the Russian government’s commitment to maintaining economic stability amidst international pressures. By encouraging exporters to increase the sale of their foreign currency earnings, the authorities aim to support the value of the ruble and safeguard the country’s economic resilience.
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