The Russian government has softened requirements for mandatory sales of foreign currency for exporters if more than half of the value of their contracts is paid in roubles, according to a government decree.
President Vladimir Putin signed the decree in October mandating the reintroduction of capital controls, affecting dozens of companies in the fuel, energy, metal, chemical, timber and grain industries in order to prop up the rouble.
The Russian currency was under pressure from capital outflows and limited foreign currency supply. In April, the capital controls measures were extended for a year.
Certain Russian exporters were required to deposit no less than 80% of foreign currency earnings with Russian banks and then sell at least 90% of those proceeds on the domestic market within two weeks.
According to a changes in a government decree, signed on May 30, the government commission on foreign investments may drop the foreign currency sales requirements for the companies if more than half of the value of their foreign contracts are settled in roubles.
The central bank has long voiced doubts over the controls’ efficacy, disagreeing publicly with the government over the issue.
The controls were introduced as the rouble tumbled past the 100 mark against the dollar and authorities sought to wrest back control of the foreign exchange market. The rouble now trades near to 90 to the dollar.
The government has argued that the controls reduce rouble depreciation risk. The central bank believes that high interest rates of 16% and strong export revenues were more impactful in supporting the rouble.
