MOSCOW (Reuters) – The Russian government has eased mandatory foreign currency sales requirements for exporters if more than half the value of their contracts is paid in rubles, according to changes to a government decree.
In October, President Vladimir Putin signed a decree ordering the restoration of capital controls that would affect dozens of companies in the fuel, energy, metallurgy, chemical, forestry and grain industries to support the ruble.
The Russian currency was under pressure from capital outflows and limited supply of foreign currency. In April, capital controls were extended for a year.
Some Russian exporters were required to deposit at least 80% of foreign exchange earnings in Russian banks and then sell at least 90% of these earnings on the domestic market within two weeks.
Under changes to a government decree signed May 30, the government’s Foreign Investment Commission may waive foreign currency sales requirements for companies if more than half the value of their foreign contracts is settled in rubles.
The central bank has long expressed doubts about the effectiveness of controls, publicly disagreeing with the government on the issue.
The controls were introduced as the ruble fell above the US$100 mark and authorities attempted to regain control of the foreign exchange market. The ruble is now trading around 90 per dollar.
The government argues that the controls reduce the risk of ruble depreciation. The central bank believes that high interest rates of 16% and strong export earnings had a greater impact on supporting the ruble.