Rouble strengthens after Putin reimposes currency controls

An employee counts Russian 1000-rouble banknotes in a bank office in Moscow, Russia, in this illustration picture taken October 9, 2023.
An employee counts Russian 1000-rouble banknotes in a bank office in Moscow, Russia, in this illustration picture taken October 9, 2023. Copyright Reuters
By Euronews with Reuters
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Moscow has imposed capital controls to prop up its currency, a similar move to the one that saved the rouble from collapsing in 2022 right after its full-scale invasion of Ukraine.


Russia's rouble leapt against the US dollar on Thursday after President Vladimir Putin ordered the mandatory sale of foreign currency revenues for some exporters to buttress the currency.

The rouble collapsed to a record low in the weeks after Russia launched its full-scale invasion of Ukraine last year, before Moscow imposed similar capital controls that saw it recover to a seven-year high.

But the currency has charted a steadily downward course this year, under pressure from capital outflows, falling exports and recovering imports.

"Today, the rouble will strengthen ... even by the end of the year we will see the rouble at 88-92 (per dollar)," Yevgeny Kogan, professor at Russia's Higher School of Economics, told Reuters.

By right before 2 pm CET, the rouble was 3.2% stronger against the dollar at 97.00, after earlier reaching 96.4550, its strongest since 27 September 2023.

Kogan warned however that by 2025-2026, businesses would form plans based on a rouble rate of 100-105.

The rouble gained 3.4% to 102.95 versus the euro and 3.1% against the yuan to 13.29.

The CEO of Russia's largest lender Sberbank German Gref said he expected the rouble to strengthen to around 90 to the dollar.

"If the parameters of our export goods remain the same ... some more strengthening is possible," the TASS news agency quoted him as saying. "The regular, fundamental exchange rate today is 85-90 per dollar."

What saved the rouble?

The government late on Wednesday said Putin had signed a decree reintroducing capital controls for an undisclosed list of exporting firms, a measure that has been on the cards since the rouble tumbled into triple digits in August.

The slump forced the central bank into an emergency 350 basis points interest rate rise, but the rouble has failed to recover significantly, weakening to a more than 18-month low of 102.3450 this week.

'A sign of despair'?

The government said the new capital controls would last for six months and require that companies submit plans to the Bank of Russia and Rosfinmonitoring, Russia's financial monitoring agency, which would ensure that they comply.

"The main purpose of these measures is to create long-term conditions for increasing the transparency and predictability of the FX market, reducing the opportunity for currency speculation," said First Deputy Prime Minister Andrei Belousov.

The central bank endorsed the measures, a shift in its stance, after it previously warned of the inefficiency of currency controls. On Thursday, the bank said the measures would improve liquidity and reduce short-term volatility.

"The rouble is even less tradable for foreign investors after Russia re-imposed some capital controls," Piotr Matys, senior FX analyst at In Touch Capital Markets.

"This decision can be interpreted at least by some market participants as a sign of despair to stabilise the rouble."

Russian stocks were mixed, with the dollar-denominated RTS index soaring by more than 2%, but the rouble-based MOEX Russian index fell 1%.

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