Putin obliged some exporters to sell foreign exchange earnings

Russian President Vladimir Putin signed a decree on the mandatory sale of foreign currency earnings received by some Russian exporting companies in order to stabilize the ruble exchange rate.

According to the decree published on the website of the Russian government, individual companies will have to sell foreign exchange earnings on the Russian market within six months in the amounts and terms that will be established by the government. They will also have to send the Bank of Russia and Rosfinmonitoring a schedule for buying and selling foreign currency on the domestic market.

The decree concerns 43 companies belonging to the branches of the fuel and energy complex, ferrous and non-ferrous metallurgy, chemical and forest industry, grain economy. The names of the companies are not mentioned in the text of the document.

Over the past hour, against the background of the ongoing war with Ukraine, the ruble has fallen by more than 40% against the dollar. The Bank of Russia raised the key rate three times in the last two months. Back in August, the Bloomberg and Reuters agencies, with reference to several sources, reported that the Russian authorities are discussing the possibility of returning the mandatory sale of foreign exchange earnings by exporters in order to stop the fall of the ruble, which has reached the mark of 100 rubles per dollar.

Alexander Isakov, economist at Bloomberg Economics for Russia and Central and Eastern Europe, believes that “the exchange rate may return to the range of 95-100 against the background of short-term growth in currency sales, but it is unlikely that the effect of such measures will be stable and long-lasting. Market participants should be alarmed by signs that that the government prefers measures of a restrictive nature to raising the level of ruble rates,” said the RBC expert.

Against the background of the introduction of the mandatory sale of foreign exchange earnings, the dollar exchange rate at the start of trading on the Moscow Stock Exchange today, it fell below 97 rubles for the first time since September 29, and the euro fell below 103 rubles.