(MENAFN) In a move aimed at shoring up the ruble and maintaining stability in the foreign exchange market, the Russian government has announced the extension of capital controls until April 30, 2025. These measures, initially implemented by presidential decree in October 2023, require select export companies to adhere to stringent regulations regarding the handling of earned foreign currency. Under the controls, these designated companies must deposit a minimum of 80 percent of their foreign currency earnings into Russian banks, subsequently selling at least 90 percent of those proceeds on the local market within a two-week timeframe.
Alongside the extension of capital controls, the government has also elongated the period for depositing foreign exchange earnings, extending it from 90 days to 120 days from the date of delivery of goods to the buyer. These adjustments reflect ongoing efforts to bolster the ruble's value and mitigate the risk of currency devaluation, particularly as the ruble experienced a decline, breaching the threshold of 100 against the US dollar.
Despite the government's assertions regarding the efficacy of these controls in reducing the ruble's vulnerability, the Russian Central Bank has maintained skepticism about their effectiveness. The central bank has openly expressed disagreement with the government on this issue, advocating for alternative measures to support the ruble. Notably, the central bank has pointed to high interest rates, held at 16 percent, and robust export earnings during the summer of 2023 as more impactful factors in bolstering the ruble's stability.
Currently, the ruble is trading near 92 to the dollar, indicative of a relatively stable but still somewhat volatile exchange rate environment. The extension of capital controls underscores the government's commitment to implementing measures aimed at stabilizing the currency and regaining control over the foreign exchange market. However, the ongoing debate between the government and the central bank highlights differing perspectives on the most effective strategies for safeguarding the ruble's value amidst evolving economic conditions.
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