Meeting on Russian Currency Controls Called by Vladimir Putin Following Rouble Decline

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President Vladimir Putin will engage with Russian policymakers on Wednesday to discuss the implementation of stricter currency controls. This comes after a 3.5 percentage point rate hike failed to stabilize the declining value of the rouble. According to sources, proposals from Russia’s finance ministry suggest that exporters should convert a portion of their foreign currency earnings, which are currently held overseas, into roubles.

The finance ministry’s proposals, revealed by the Financial Times, include a requirement for exporters to sell up to 80% of their foreign currency revenue within 90 days after delivery. Companies that fail to comply would be ineligible for government subsidies. Other proposed measures involve prohibiting dividend payments and overseas loans, cancelling import subsidies, restricting currency swaps, and limiting the amount of foreign currency that exporters can transfer out of Russia.

This would mark the first instance of Russia increasing currency controls since the early stages of Putin’s involvement in Ukraine last year. Evidently, the Kremlin is growing concerned about the impact of the ongoing conflict on the national economy.

During a government meeting on Monday, Finance Minister Anton Siluanov was the only economic official to support the implementation of currency controls. However, Putin will consider suggestions from policymakers in his quest to bolster the rouble after the central bank’s rate hike yielded only moderate results.

“These matters aren’t decided in any way other than with him,” remarked an insider familiar with the situation.

The rouble, which briefly depreciated below the significant threshold of 100 against the dollar on Monday, continues to face pressure due to mounting deficits resulting from increased military spending, declining export revenues, and a growing reliance on imports.

Russia’s central bank has limited ability to boost the rouble as approximately $300 billion of its foreign reserves remain frozen due to Western sanctions, rendering it incapable of selling dollars and euros.

At the time of writing, there has been no response from the Kremlin or the finance ministry regarding these proposals. Reuters first reported on the details of the suggestions.