Russian President Vladimir Putin canceled the requirement for the compulsory sale of 50% of export revenues in foreign currency.
Exporters remain obligated to sell the proceeds, but the amount will now be determined by the government commission to control foreign investment.
The maturity of the sale is determined by the Central Bank Board of Directors.
The presidential decree states that “residents participating in foreign economic activity must sell foreign currency in the amount determined by the government commission to monitor foreign investments in the Russian Federation, within the period determined by the Board of the Central Bank.” “
On June 6, a government commission allowed exporters to credit their earnings to foreign bank accounts. This right was given to Russian companies that entered into foreign trade agreements with foreign companies.
“This is possible subject to the conditions for the subsequent return of funds to Russia and the subsequent sale of export proceeds in the amount determined by presidential decree,” the Ministry of Finance said. Said.
What restrictions apply to exporters?
As of February 28, exporters had to sell 80% of their foreign exchange earnings within three business days of receipt under any foreign trade agreement. Such a measure was supposed, among other things, to support the ruble and protect it from depreciation. The restriction came into effect shortly after the introduction of Western sanctions and the freezing of Russia’s gold and foreign currency reserves abroad.
Already in mid-April, relief began. Thus, the Central Bank of Russia eased foreign exchange controls for the non-commodity non-energy sector and increased the sales period from three days to 60 days due to problems in the sale of dollars and euros. In May, the Central Bank again increased the sales period, reaching 120 days.
Also, on May 24, Putin signed a decree that reduced the share of revenue that had to be sold to 50%. The Ministry of Finance explained why this happened. ruble exchange rate stability and “Adequate foreign exchange liquidity in the domestic foreign exchange market”.
International transfer limit
To control the outflow of money abroad from Russia, a strict restriction was placed on international money transfers by citizens and companies. At first, they were limited to $5,000 (or its equivalent in another currency) per month.
As the ruble started to strengthen, the limit was increased to $10,000 for transfers to foreign accounts and to $5,000 for transfers made without opening an account. There was another relief in mid-May. The monthly overseas transfer limit has been increased to $50,000, but this measure only affects Russians and fellow countrymen.
And from June 8, the threshold for money transfers from people outside the Russian Federation has been raised again. This time, up to the equivalent of $150,000 immediately. At the same time, the restrictions will apply until at least 30 September 2022 (inclusive).
According to one of the Central Bank employees quoted by TASS, the amount has been tripled. It weakens the ruble against the dollar.
what’s going on with the ruble
The ruble has been strengthening since mid-March in the face of Western sanctions and restrictions by the Central Bank and the Ministry of Finance. When trading on the Moscow Stock Exchange on June 9, the dollar exchange rate fell by almost 2 rubles and was at least 57.5 rubles for the day.
Against the backdrop of sanctions and counter-sanctions, Russian imports fell significantly (could be cut by almost half in March-April), while exports remained strong (thanks to the commodity segment and rising prices), as BCS investment company analysts explained. For this reason, foreign exchange revenues from exports continued to flow into the country and be converted into rubles.
in such a situation Ruble demand significantly outpaces dollar demand. In addition, the prohibition of trading Russian securities for foreigners, as well as restrictions on withdrawals from the Russian Federation and the sale of cash, causes the ruble to strengthen. But experts say Excessive strengthening of the ruble does not benefit the statebecause it reduces tax revenues to the budget. This can lead to difficulties in meeting the social obligations of the state to the population. The dollar rate included in the 2022 budget averages 72.1 rubles per dollar.