UK markets open in 4 hours 8 minutes
  • NIKKEI 225

    +276.80 (+1.04%)

    +552.53 (+2.54%)

    +0.49 (+0.46%)

    +7.40 (+0.40%)
  • DOW

    +823.28 (+2.68%)

    -253.25 (-1.45%)
  • CMC Crypto 200

    +8.01 (+1.76%)
  • ^IXIC

    +375.42 (+3.34%)
  • ^FTAS

    +100.39 (+2.59%)

Rouble off 2-week highs as Putin signs capital control decree

  • Oops!
    Something went wrong.
    Please try again later.
·2-min read
FILE PHOTO: Illustration shows Russian Rouble banknote is placed on U.S. Dollar banknotes
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

(Reuters) -The Russian rouble slid off a two-week high on Thursday after President Vladimir Putin signed a decree that the market interpreted as a potential means for export-focused companies to scale down conversion of foreign currency.

Exporters will now need to convert forex into roubles in an amount set by a government commission, the decree said, without providing details.

The move was seen as paving the way to an imminent easing of capital controls that had obliged exporters to convert 80% of their revenues into roubles after Russia sent tens of thousands of troops into Ukraine on Feb. 24. This ratio was later lowered to 50% in May.

By 1342 GMT, the rouble was 0.3% weaker against the dollar at 59.60 , earlier clipping its strongest point since May 25 of 57.4075.

It was still 0.3% stronger on the day at 63.33 versus the euro after touching a two-week high of 61.20.

Putin's decree, that in theory could lead to a lower supply of foreign currency by exporters, could send the rouble weaker to levels of 65 to the dollar, which are more comfortable for the budget, Promsvyazbank analysts said in a note.

"This decree is a very good illustration that the dollar below 60 really hurts exporters, especially non-commodity ones, and the budget," said Evgeny Suvorov, an analyst at CentroCreditBank.

The central bank declined to comment. The finance ministry did not immediately respond to a Reuters request for comment.

The move comes as the rouble has become the world's best-performing currency this year, steered by capital controls for more than three months. A strong rouble dents Russia's revenues for selling commodities abroad for foreign currency.

The central bank is now in focus as it will hold a rate-setting meeting on Friday. A rate cut could put some downside pressure on the rouble and support prices of OFZ treasury bonds.

A majority of analysts polled by Reuters expect a 100-basis-point rate cut to 10% as the bank tries to make lending more affordable amid sluggish consumer demand and a pause in inflation.

But a sharper cut to 9% was also possible as economic prospects and inflation easing give the central bank more room to manoeuvre, BCS Global Markets said.

Consumer inflation in Russia slowed to 17.10% in year-on-year terms in May from 17.83% in April, which was its highest level since January 2002, data showed on Wednesday.

Russian stock indexes were down.

The dollar-denominated RTS index fell 1% to 1,218.4 points. The rouble-based MOEX Russian index shed 1.3% to 2,288.2 points.

($1 = 59.2000 roubles)

(Reporting by ReutersEditing by Mark Heinrich and Bernadette Baum)

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting