Anna 
The Russian rouble made an impressive leap, surging more than 3% to reach a more than two-week high, surpassing 96 to the dollar, following President Vladimir Putin’s directive for mandatory foreign currency sales by specific exporters. This move is aimed at bolstering the Russian currency.
Last year, the rouble hit a record low in the weeks after Russia’s invasion of Ukraine. However, authorities implemented similar capital controls, leading to the rouble’s recovery to a seven-year high. This year, it has experienced a consistent downward trajectory due to factors like capital outflows, decreasing exports, and increasing imports.
As of 0720 GMT, the rouble had strengthened by 3.4% against the dollar, reaching 96.79, with an earlier peak at 96.4550, the highest since September 27. It also surged 3.3% against the euro, reaching 102.93, and rose by 3.3% against the yuan, reaching 13.26.
Professor Yevgeny Kogan of Russia’s Higher School of Economics expects further strengthening, saying, “Today, the rouble will strengthen… even by the end of the year, we will see the rouble at 88-92 (per dollar).” However, he cautioned that by 2025-2026, businesses might have to plan based on a rouble rate of 100-105.
The Russian government announced that Putin had signed a decree reintroducing capital controls for specific exporting companies, a measure that was considered after the rouble’s significant fall into triple digits in August. To address this decline, the central bank had to implement an emergency 350-basis-point interest rate increase, but the rouble’s recovery remained limited, slipping to a more than 18-month low of 102.3450 this week.
The government emphasized that these new capital controls would last for six months and necessitate companies to submit plans to the Bank of Russia and Rosfinmonitoring, Russia’s financial monitoring agency, which will ensure compliance. According to First Deputy Prime Minister Andrei Belousov, the primary aim of these measures is to create long-term conditions to enhance transparency and predictability in the foreign exchange market, thereby reducing opportunities for currency speculation.
The central bank added that the targeted nature of these restrictions would have minimal impact on the majority of entities involved in foreign trade. However, the successful implementation of these controls will be pivotal in determining the outcome, as pointed out by Dmitry Polevoy, head of investment at Locko-Invest. He noted, “The participation of Rosfinmonitoring allows us to count on ‘success,’ but there is still the outflow of capital!”
In the energy markets, Brent crude oil, a significant export for Russia, witnessed a 0.3% rise, reaching $86.11 per barrel.
