The Central Bank linked the strengthening of the ruble with an increase in sales of foreign currency earnings

Sales of foreign currency earnings by the largest exporters in October amounted to $12.5 billion. Against this background, the ruble strengthened at the end of the month, according to the review of financial market risks of the Central Bank of Russia (CB) for October (.pdf).

In September, the volume of sales of foreign currency earnings was $3.3 billion less. The growth of this indicator, as stated in the Central Bank’s material, is associated with the presidential decree on the mandatory sale of foreign currency earnings: it came into force on October 16. The average daily sales volume in the second half of October increased to $717 million from $388 million in the first half of the month, according to Central Bank data.

The volume of sales of foreign currency earnings in October also increased due to rising oil prices in September, according to the Central Bank. As the regulator added, the process of devaluation continued last month—banks’ foreign currency assets decreased by $3.2 billion.

“The strengthening of the ruble was due to an increase in the volume of net sales of export proceeds in the absence of purchases of foreign currency by the Bank of Russia within the framework of the budget rule, as well as against the backdrop of an increase in the key rate to 15%,” the Central Bank said in a statement.

On October 11, Russian President Vladimir Putin signed a decree according to which exporters from the closed list are required to credit their accounts in Russian banks with at least 80% of the currency received under export contracts, in order to then sell at least 90% of this amount on the domestic market. On November 2, a bill on fines for failure to fulfill obligations to sell foreign currency earnings was introduced to the State Duma. For legal entities, it will amount to up to one amount of foreign currency earnings.

For more details, see the Kommersant article “A percentage was assigned to revenue.”

Petr Buzlaev