The newspaper Vedomosti learned that the Central Bank and the Ministry of Finance may limit the purchase of foreign currency from the domestic market for large transactions to buy the assets of foreign companies leaving Russia. It is pointed out that this is due to the fact that large purchases of dollars and euros in the domestic market may cause ruble volatility due to low foreign exchange liquidity.
This information was confirmed to the newspaper by Ivan Chebeskov, director of the fiscal policy department of the Ministry of Finance. He noted that the mechanism will be floating and will not depend on a certain amount. Chebeskov reminded that the Central Bank and the Ministry of Finance had previously introduced foreign exchange buying conditions within the scope of large transactions that could mobilize the market.
“In general, within the framework of the approaches of the subcommittee (which allows non-residents to withdraw from Russian assets – Vedomosti), we always take into account the market conditions in the foreign exchange market when making decisions on transactions, including: Stocks and transactions with stocks,” said Chebeskov. .
Shell deal and the collapse of the ruble
At the beginning of April 2023, US and European currencies rose above 81.79 rubles, reaching their highest levels since April 2022. per dollar and 90.2 rubles. for the euro. Experts attributed the weakening of the ruble to NOVATEK’s purchase of Shell’s stake in the Sakhalin-2 project for approximately 100 billion rubles. Bloomberg also wrote about the deal’s impact on the Russian currency market.
On April 12, the head of the Central Bank, Elvira Nabiullina, attributed the situation in the foreign exchange market to the decline in exports and falling oil prices. According to him, there is no need for the return of foreign exchange earnings and other restrictions. Nabiullina noted that the Central Bank favors a more stable foreign exchange market, but “is not in favor of the administrative setting of the exchange rate”, which “has led to sharp devaluations and even financial crises”. Exchange rate stability should be facilitated by budget rule and low inflation.
On April 10, Central Bank Deputy Governor Alexei Zabotkin said that the ruble’s decline against foreign currencies was due to the Russian Federation’s export revenues past the bottom. He noted that soon, export earnings will begin to recover. According to Zabotkin, revenue follows the volume and price of sales with a delay – payment occurs within three months after the shipment of the goods.
“The emphasis that commentators place on this fact is probably exaggerated,” Zabotkin said.
At the same time, Deputy Finance Minister Alexei Moiseev said that agreements such as Shell’s exit from Russian assets should not lead to a jump in the exchange rate. According to him, the government commission imposes severe restrictions on the foreign exchange rate of companies. “If someone violates these restrictions, it is likely that the Bank of Russia will be able to see it and comment. There will be a reaction,” he said.
“To be honest, I have some doubts about this logic (the effect of the Shell agreement on the ruble exchange rate. – approx. socialbites.ca),” Moiseev said.
On April 6, Finance Minister Anton Siluanov attributed the fall of the ruble to foreign exchange inflows and outflows in Russia. According to him, recently the prices of Russian energy carriers have risen and, accordingly, more foreign currency will flow into the country – and “the ruble exchange rate will tend to strengthen.”
On April 4, Kommersant reported, citing sources, that the Russian company Novatek received the approval of Russian President Vladimir Putin to receive and withdraw the entire 94.8 billion rubles for Shell’s stake in the Sakhalin-2 project. money from Russia.
The Kremlin and Shell did not comment on a possible deal. “We never comment on business correspondence,” said Dmitry Peskov, Press Secretary of the President of the Russian Federation.