HomeForexRuble stabilizes, securing gains following Putin's introduction of measures to control capital...

Ruble stabilizes, securing gains following Putin’s introduction of measures to control capital outflows.

Russian Rouble Stabilizes as Putin Implements Capital Controls

Russian Rouble Gains Stability

The Russian rouble has found stability near 97.5 against the dollar after President Vladimir Putin introduced measures to support the currency. In the previous session, the rouble experienced significant gains as Putin ordered the mandatory sale of foreign currency revenues for select exporters. This move aims to bolster the rouble and strengthen its value against other currencies.

Details of Capital Controls

While the government announced the reintroduction of capital controls for 43 exporting firms, specifics such as the percentage of revenues affected and the implementation date are yet to be disclosed. Investors and the market eagerly await further information to gauge the potential impact of these measures.

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Rouble’s Performance

At 0750 GMT, the rouble weakened slightly by 0.1% against the dollar, reaching 97.51. However, it had rallied over 3% in the previous session, hitting a two-week high of 96.4550. The rouble also experienced a marginal decline of 0.1% against the euro, trading at 102.89, and a 0.3% drop against the yuan, settling at 13.33.

Market Uncertainty

Investors remain uncertain due to the Kremlin’s decision not to disclose the list of companies affected by the capital controls. The lack of information makes it challenging to estimate the rouble’s “fair” value accurately. Experts, such as Alexei Antonov of Alor Broker, believe that while the rouble may strengthen in the short term, its long-term outlook remains weak due to extensive budget spending and high import demands.

Impact on Monetary Policy

If the rouble continues to strengthen, it could alleviate pressure on the central bank. Market expectations suggest that the central bank may raise interest rates at its upcoming meeting on October 27. However, it is worth noting that the central bank did not fully support the reintroduction of capital controls. In the past, the bank preferred to address the rouble’s weakness through monetary policy. Similar controls were previously implemented in response to Russia’s involvement in Ukraine.

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Positive Outlook for Oil and Stocks

  • Oil prices, a crucial benchmark for Russia’s main export, rose by 2.2% to $87.85 per barrel.
  • Russian stock indexes also saw positive movement, with the dollar-denominated RTS index climbing 0.4% to 1,030.4 points and the rouble-based MOEX Russian index increasing by 0.5% to 3,189.7 points.

The Russian economy continues to navigate various challenges, and the implementation of capital controls is one strategy to stabilize the rouble. As the situation unfolds, market participants eagerly anticipate further details and their potential implications.

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