According to reports, Russia has implemented further restrictions on currency in an effort to support the declining rouble. This includes limiting western companies from receiving proceeds from selling Russian assets in dollars and euros.
According to sources familiar with the situation, the Financial Times reports that global corporations looking to withdraw from Russia following its incursion into Ukraine will be required to divest their assets in roubles due to recent government limitations.
According to the FT, if they persist in wanting to receive foreign currency for their assets, they may experience delays or potentially lose money on the amount that can be sent overseas.
The rouble has weakened since Moscow’s tanks rolled into Ukraine in February last year. The war prompted western countries to impose sanctions on Russia, hitting its currency and wider economy. The rouble has lost more than 20% of its value against the dollar this year, sliding past the psychologically important level of 100 roubles to the US currency in August.
After Russia implemented export controls and raised interest rates, the situation improved. However, in early October, the barrier of 100 was once again surpassed.
The central bank of Russia has raised interest rates four times since August in order to strengthen the value of the currency and decrease inflation. On Friday, it raised its interest rate to 15%, which was higher than anticipated. In a recent action, Vladimir Putin signed a decree requiring 43 companies to convert a portion of their foreign currency earnings into Russian rubles. As a result, the ruble is currently trading at approximately 92 against the US dollar.
When questioned about the FT report on Tuesday, Dmitry Peskov, the spokesperson for the Kremlin, stated that any requirements for western companies to receive payments in roubles upon leaving Russia were not related to the recent fluctuations of the currency.
According to Peskov, Russia is willing to accept outside investment and is prepared to establish favorable business conditions for foreign companies.
He stated to the Financial Times that it is the responsibility of each government to establish the best circumstances for its currency, thereby creating optimal conditions for the Russian rouble. He emphasized that the rouble takes precedence and that Russia is motivated by its own interests and gains.
Following the decline of the rouble in July, the Russian government implemented restrictions on the methods companies could use to transfer their profits out of the country.
When companies sell their assets in foreign currencies, they have the option to transfer the funds to a “C” account at a Russian bank with strict limitations, or receive the proceeds in multiple payments to an overseas account. Alternatively, they can convert the funds into roubles and receive the full amount immediately into a standard Russian bank account.
The recent difficulties of the currency have been attributed to a decrease in export quantities and an increase in domestic demand for imports, according to Moscow.
Source: theguardian.com
