Russia eases forex sales requirements for contracts in roubles

Russia eases forex sales requirements for contracts in roubles

MOSCOW (Reuters) – The Russian government has eased requirements for mandatory foreign currency sales for exporters if more than half the value of their contracts is paid in rubles, according to changes 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, metals, chemicals, timber and grain sectors, in order to support the ruble.

The Russian currency was under pressure from capital outflows and limited foreign exchange supply. In April, capital control measures were extended for another year.

Some Russian exporters were required to deposit at least 80% of their foreign exchange earnings with Russian banks and then sell at least 90% of these earnings domestically within two weeks.

According to changes to a government decree signed on May 30, the government commission on foreign investment can drop foreign currency sales requirements for companies if more than half of the value of their contracts abroad is settled in rubles .

The central bank has long expressed doubts about the effectiveness of the controls, publicly disagreeing with the government on the issue.

These controls were introduced as the ruble surpassed the 100 mark against the dollar and authorities sought to regain control of the foreign exchange market. The ruble is now trading at almost 90 to the dollar.

The government argued that the controls reduced the risk of ruble depreciation. The central bank estimates that high interest rates of 16% and strong export earnings have had a greater impact on supporting the ruble.

(Reporting by Vladimir Soldatkin; editing by Peter Graff)

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