Russian government proposes extension of capital controls until end of 2024

These measures, initially decreed by President Vladimir Putin in October, have proven effective in stabilizing the Russian currency. The current controls are set to expire in April, and the proposed extension aims to provide continued support to the rouble.

The Russian government has put forth a proposal to extend capital controls that mandate exporters to convert foreign currency revenues into roubles until the end of 2024. These measures, initially decreed by President Vladimir Putin in October, have proven effective in stabilizing the Russian currency. The current controls are set to expire in April, and the proposed extension aims to provide continued support to the rouble.

Introduced as the rouble faced significant depreciation against the dollar, the capital controls have been met with success, according to the government’s statement on the Telegram messaging app. Despite opposition from the central bank, the controls require undisclosed exporting firms to deposit a minimum of 80% of foreign currency earnings with Russian banks. Furthermore, these firms must sell at least 90% of the deposited proceeds on the domestic market within two weeks.

The government’s proposal to extend these measures until the end of 2024 aligns with its efforts to maintain stability in the currency market and ensure a steady supply of foreign currency for importers. The measures aim to cover the deficit of foreign currency needed by importers to sustain the supply of products to the country.

First Deputy Prime Minister Andrei Belousov noted that exporters have generally adhered to the requirements outlined in the presidential decree. This compliance has facilitated the balancing of the foreign currency deficit required by importers, contributing to the overall success of the capital controls.

While specific details about the potential impact of the extension remain limited, analysts from Rosbank suggest that the news is likely to boost the rouble. The extension of capital controls is viewed as a strategic move to safeguard the Russian currency and ensure economic stability amid challenging global economic conditions.

As the proposal undergoes further consideration and potential implementation, it will be closely monitored for its impact on the Russian financial landscape. The extension of capital controls reflects the government’s commitment to employing various economic measures to address currency challenges and maintain a resilient economic environment in the face of external uncertainties.