The restrictions imposed by the Central Bank of the Russian Federation on moving capital abroad have shown immediate effectiveness, curbing short-term pressures in the foreign exchange market. This assessment comes from an interview with a senior lecturer in state and municipal finance at the Russian University of Economics, who holds a Master of Laws, published by socialbites.ca. GV Plekhanov Mary Valishvili.
The liberalization of foreign exchange controls that followed did not produce notable changes in the ruble’s level or in the plans for capital withdrawal by investors. The economist noted a modest strengthening of the ruble after a lengthy session of the Financial Market Committee of the State Duma on September 20. During that meeting, discussions focused on possible limits not only on transfers denominated in foreign currency commonly referred to as toxic or potentially risky, but also on restrictions for rubles moving abroad, as described previously.
By the end of 2022, citizens had withdrawn about $47 billion from Russia, out of a total capital outflow of $243 billion. Of this amount, $33 billion was deposited in foreign banks, while $14 billion left the country in cash. The associate professor suggested that preliminary estimates indicated total capital outflows could reach as much as $90 billion in 2023, with individuals likely responsible for no more than a fifth of that total.
He stressed the need to understand the central bank’s position. The regulator has repeatedly cautioned that administrative controls on capital movement can be circumvented by both enterprises and individuals, who may seek loopholes to move assets abroad. The emphasis, he argued, should be on attracting investor funds and fostering a favorable climate for investment within Russia.
According to the economist, all currency restrictions in place reflect Western sanctions. Until those sanctions are lifted, a full removal of protective measures is unlikely. The Central Bank of the Russian Federation recently extended its capital outflow restrictions for another six months, setting a monthly transfer cap of $1 million abroad. The initial limit, $5,000, was introduced in March 2022, later increasing as the situation stabilized. Earlier discussions among Russian officials also touched on restrictions related to the withdrawal of rubles abroad.
Overall, the policy stance signals a cautious approach to preserving financial stability while monitoring the evolving sanctions landscape, with ongoing debates about how best to balance regulatory safeguards against the need to maintain an attractive environment for both domestic and international investors. The evolving policy framework continues to shape expectations for capital movements and exchange rate dynamics in the Russian economy. [Source attribution: socialbites.ca]