MOSCOW (Reuters) – The Russian government has softened requirements for mandatory foreign currency sales for exporters if more than half the value of their contracts are paid in rubles, according to changes to a government decree.
President Vladimir Putin signed the decree in October mandating the reintroduction of capital controls, hitting dozens of companies in the fuel, energy, metals, chemicals, timber and grain industries to keep the ruble afloat.
The Russian currency was under pressure due to capital outflows and the limited supply of foreign currency. In April, capital control measures were extended for a year.
Certain Russian exporters were required to deposit no less than 80% of foreign exchange earnings in Russian banks and then sell at least 90% of those earnings on the domestic market within two weeks.
According to an amendment to a government decree signed on May 30, the government’s Foreign Investment Commission may drop foreign currency sales requirements for the companies if more than half of the value of their foreign contracts are settled in rubles.
The central bank has long expressed doubts about the effectiveness of controls and publicly disagreed with the government on this issue.
The controls were introduced as the ruble fell past 100 against the dollar and authorities tried to regain control of the foreign exchange market. The ruble is now trading near $90 to the dollar.
The government has argued that the controls reduce the ruble’s risk of depreciation. The central bank believes that high interest rates of 16% and strong export earnings had a greater impact on supporting the ruble.
(Reporting by Vladimir Soldatkin; Editing by Peter Graff)
