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Monday, August 21, 2017

Russian Central Bank won't restrict sales of foreign currency proceeds

The Russian Central Bank announced recently that it would not impose restrictions on the sale of foreign currency proceeds by exporters or impose capital controls.

Central Bank First Deputy Chief Ksenia Yudayeva said exporters and the general population do not gain anything by buying into a weakening ruble. Central Bank Chairwoman Elvira Nabiullina said actions on the part of banks, corporations and households are weakening the country's currency.

“Unfortunately, everyone, including the population, is joining this game of expectations for a weaker ruble,” Nabiullina said. “This game (for the ruble’s weakening) also involves banks and companies. Exporters may delay the sale of foreign currency proceeds while importers may buy up large amounts of foreign currency because they have to pay for their contracts. This behavior arises from constant expectations of the ruble’s weakening."

The bank has said on multiple occasions that mechanisms on the control of capital are ineffective and not worth implementing, even during challenging conditions.

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