Putin to hold meeting on Russian currency controls after rouble slide

President Vladimir Putin is to discuss ramping up currency controls with Russian policymakers on Wednesday after an extraordinary 3.5 percentage point rate rise failed to halt the rouble’s slide, said two people familiar with the matter.

Putin will hear proposals from Russia’s finance ministry to require exporters to convert some of their foreign currency earnings, most of which are currently held abroad, into roubles, the people said, Financial Times reports.

The finance ministry’s proposals, seen by the Financial Times, would require exporters to sell up to 80 per cent of their foreign currency revenue within 90 days after delivery and ban companies that refused to comply from receiving government subsidies.

Other proposed measures include a ban on paying out dividends and extending loans abroad; cancelling import subsidies; limiting currency swaps; and reducing the amount of foreign currency exporters are allowed to take out of Russia.

The move, which would be the first time Russia has increased currency controls since the early weeks of Putin’s invasion of Ukraine last year, indicates growing concern in the Kremlin about the effect the war is having on the country’s economy.

Finance Minister Anton Siluanov was the sole economic official who spoke up in favour of currency controls at a government meeting on August 14, according to three people familiar with the matter.

But Putin is to hear out policymakers’ proposals to bolster the rouble after the central bank’s extraordinary rate rise only had a moderate effect on exchange rates.

“These matters aren’t decided in any way other than with him,” said one of the people familiar with the matter.

The rouble, which briefly weakened below the psychologically important barrier of 100 to the dollar on August 14, is under sustained pressure from ballooning deficits resulting from increased military spending, a drop in export revenues and a growing reliance on imports.

Russia’s central bank, meanwhile, has limited capacity to boost the rouble after Western sanctions froze about $300 billion of its foreign reserves, leaving it essentially unable to sell dollars and euros.

The Kremlin and the finance ministry did not immediately respond to a request for comment. Reuters first reported on the details of the proposals.