Russia’s ruble is having a banner year, but Moscow may ease capital controls that helped make it the world’s top currency against the dollar, the report said.
- According to a Bloomberg report, Russia may loosen a major wartime capital control to halt the ruble’s climb.
- Russian exporters may need to convert 50% of their hard-currency revenues from less than 80% to rubles.
- Today the ruble is 30% stronger against the dollar than it was before Russia invaded Ukraine.
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According to Bloomberg, Russia could loosen a wartime capital control that helped send the ruble against the dollar to its highest level in four years.
After Western sanctions sealed Russia’s foreign exchange reserves for its invasion of Ukraine, Moscow imposed tighter controls on moving the currency, which at one point depreciated to less than a penny.
One of those controls required that Russian exporters convert 80% of their hard-currency revenue into rubles. But Moscow could soon reduce by 50% this week, sources told Bloomberg.
Amid capital controls, the ruble is now 30% stronger against the dollar, before Russia invaded Ukraine and was the world’s top-performing currency against the greenback. Demand for Russia’s currency is also rising as more nations appear to comply with the Kremlin’s requirement that energy products be paid for in rubles.
The appreciation of the ruble has made Russian exports abroad more expensive and less competitive, while also putting more pressure on inflation by making imports costlier. On Monday, Russia’s Vedomosti Daily reported that the central bank has started buying foreign currency to stop the ruble’s climb.
The ruble was up almost 4% against the dollar on Monday, at around 57.85 – hovering near 57.0750 it reached on Friday, its strongest mark since March 2018.
Russia has eased other limits on foreign exchange operations imposed at the start of the war. The central bank recently allowed Russians and non-residents to send up to $50,000 in foreign currency over $10,000.
Still, currency traders may stop using the onshore exchange rate for some transactions because capital controls have created a larger price difference than offshore rates, Bloomberg previously reported.
The Trade Association for Emerging Markets recommends that traders use the rate from WM/Refinitiv to settle certain derivatives contracts from 6 June.
