Russia cuts mandatory FX conversion level for exporters to 50% By Reuters

© Reuters. FILE PHOTO: A Russian rouble banknote is seen positioned on U.S. greenback banknotes on this illustration taken March 1, 2022. REUTERS/Dado Ruvic/Illustration

(Reuters) – Russia is reducing the proportion of overseas forex revenues that exporters should convert into roubles to 50% from 80%, the finance ministry mentioned on Monday, after the coverage contributed to steep beneficial properties within the native forex.

Regardless of an financial disaster prompted by the battle in Ukraine, the rouble has surged about 30% towards the greenback this yr, and on Monday hit a close to seven-year excessive towards the euro.

That has raised issues the robust forex may harm Russia’s finances revenues from exports.

The finance ministry mentioned a authorities fee had determined to decrease the proportion of revenues that exporter-focused firms should convert into roubles.

“That is linked to the stabilisation of the rouble charge and reaching a enough stage of overseas forex liquidity on the home forex market,” the ministry mentioned.

Russia launched the obligatory overseas forex conversion in late February after Western sanctions – imposed in response to what Russia calls its “particular army operation” in Ukraine – froze almost half of the nation’s reserves and disadvantaged the central financial institution of means to intervene within the forex market.

Since then, the rouble has been boosted by demand from exporters, whereas there was restricted demand for {dollars} and euros from importers resulting from disrupted provide chains.

Retail demand for overseas forex has additionally been held again by restrictions on cash withdrawals from financial institution accounts and on cross-border transactions.

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