The Russian government today publicly questioned the effectiveness of capital controls (capital controls), with the Central bank to directly oppose the government's proposal to extend the requirement for exporters to convert earnings into foreign currency.
The government claims that the measures taken by order of President Vladimir Putin in a decree he signed in October, have been effective and indicated that they could be extended until the end of the year. They are currently set to expire in April.
But the Central bank which had previously warned that currency controls had been ineffective and that they could eventually be bypassed, he said he saw no good reason to extend them.
The controls were introduced as the ruble tumbled against the dollar to over 100 rubles to the dollar and the authorities tried to regain control of the foreign exchange market. Today it was trading near 88 rubles per dollar.
“Taking into account the current results according to the presidential decree, the measures will be proposed to be extended until the end of 2024,” the government said on the Telegram app.
The order requires dozens of undisclosed export companies to testify at least 80% of earnings in foreign currency to Russian banks and then sell at least 90% of these revenues in the domestic market within two weeks.
“It can be noted today that according to available data, exporters have generally complied with the requirements of the presidential decree,” First Deputy Prime Minister Andrei Belousov said. “This has made it possible to meet the shortfall in foreign exchange needed by importers to maintain the country's supply us with products”.
But the central bank said high interest rates, which it raised to 16% in December, and strong export earnings in the summer of 2023 were more effective.
“The Bank of Russia believes that the effect of these measures on foreign exchange markets in the previous months was modest compared to the effect on the exchange rate of monetary policy, the level of the key interest rate,” the central bank said in a statement.
“The increase in the cost of export volume, which affected the foreign exchange market with a time lag, is related to the timing of foreign trade settlements.”
Source: News Beast
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