Vladimir Putin is scheduled to convene with top financial officials as the Kremlin contemplates mandating companies to purchase roubles using their foreign earnings in an effort to stabilize Russia’s declining currency.
The Russian President is set to review proposals with the nation’s finance ministry as they work towards finalizing these plans. These proposals are anticipated to necessitate that businesses earning Western currency must exchange it for the rouble.
This strategy to eliminate reliance on “unfriendly” Western funds, initially disclosed by Reuters, emerges following the Central Bank of Russia’s significant decision to raise interest rates by an astonishing 3.5 percentage points, aiming to curb the devaluation of its currency. Russia had previously enacted comparable currency regulations in the aftermath of its invasion of Ukraine the previous year.
This week, the rouble momentarily dipped below the 100-to-the-dollar mark and has depreciated approximately 25% in 2023, as revenues from oil exports diminish and Moscow allocates substantial funds for military equipment to support its struggling military campaign in Ukraine.
Under the proposed regulations, Russian exporters would be obligated to sell as much as 80% of their foreign currency reserves within a 90-day period following payment receipt, and companies failing to comply would be ineligible for government subsidies. The Financial Times was the first to report specifics of today’s meeting.
