Rouble Strengthens as Government Lowers Currency Sales Requirement

The Russian rouble strengthened against the dollar on Monday following a government decision to lower mandatory foreign currency sales by major exporters from 60% to 40%. Despite sanctions affecting the Moscow Exchange, the central bank noted that strong forex sales by exporters have helped calm market volatility.

The Russian rouble saw a slight uptick against the dollar on Monday after the government reduced mandatory foreign currency sales for major exporters from 60% to 40%, effective over the weekend. By 0753 GMT, the rouble was trading 0.7% higher at 87.30 to the dollar.

Sanctions on the Moscow Exchange and the National Clearing Centre led to a range of prices and spreads as trading moved to the over-the-counter market on June 14, complicating access to reliable pricing for the Russian currency. An initial requirement to sell 80% of foreign currency earnings was implemented in October 2023 to support the rouble, later reduced to 60% in June, with the latest cut announced on July 13.

The Russian central bank noted that compulsory forex sales have been effective in reducing market volatility, allowing for a relaxation of controls. According to a June financial markets risk report, currency sales by exporters have remained robust, supporting the local stock market that saw highs in May but has declined since. Analysts believe that foreign currency sales exceed the government's threshold, aiding the stock market. On Monday, the index was 0.4% lower.