Alexander Isakov, Russia and Central and Eastern Europe economist at Bloomberg Economics, said that in the face of a short-term increase in foreign exchange sales, the decision to force some exporters to sell their foreign currency earnings could return the dollar exchange rate “to the 3 percent range.” 95-100” reports RBC.
He also believes that this effect is unlikely to be stable and long-lasting. According to him, market participants should be wary of signs that “the government is opting for restrictive measures rather than increasing the ruble exchange rate.”
Isakov continued: “If the market perceives this decision as the beginning of a trend to close the financial account, this could stimulate capital outflow and weaken the ruble after the initial increase in foreign exchange sales.”
According to him, the government is determined to stabilize the exchange rate by about 100 rubles. Prevent further weakening of the Russian currency, including per dollar and painful inflationary consequences. Moreover, as the expert noted, authorities believe that “further increases in the (key) interest rate pose a threat of recession in 2024 due to the cooling in credit.” He believes that tighter control over foreign exchange sales makes more sense for the government than raising interest rates.
Isakov believes that Russian President Vladimir Putin’s decree is not a “first step”, but looks like “a fairly complete package of measures that can be extended to the corporate sector.” If these measures have no effect, further steps will apply to individuals and limit their transactions with foreign currency assets – for example, “in the form of reintroducing lower limits on the withdrawal of funds abroad.”
As Sergei Konygin, senior economist at Sinara investment bank, said, the decision is aimed at reducing the volatility of the ruble by creating “a foreign exchange liquidity buffer that can be used to stabilize the ruble.” In his opinion, this is a kind of alternative to the state budget rule, only for companies. As the expert notes, “a similar mechanism operates in China, where state banks regulate the offshore exchange rate.”
The other day, Russian Presidential Press Spokesperson Dmitry Peskov said the following about Putin: signed Decree on the forced sale of foreign currency by some Russian exporters.
According to the Kremlin representative, the decree confirms the list of such exporters.
Previously in Russia appreciated triple digit dollar exchange rate.