Ruble retreats as central bank eases capital controls
The ruble weakened against foreign currencies on Monday after the previous week’s record rally as the Bank of Russia relaxed capital control measures.
As of 10am GMT, the ruble slid to around 78 rubles to the US dollar and to just over 84 against the euro during trading on the Moscow Exchange. The Russian currency lost roughly 4% of its value against the dollar and 3% against the euro since surging on Friday to its highest level this year.
Monday’s drop follows the central bank’s decision to relax temporary capital control measures that were introduced over the past few weeks to support the currency amid sanctions against Russia.
A 12% commission for buying foreign currency through brokerages was scrapped as of Monday and a temporary ban on selling foreign exchange cash to individuals will be lifted from April 18.
Among the remaining support measures are the obligatory conversion of 80% of FX revenues by export-focused companies and a high key interest rate, which was cut from 20% to 17% last week.
The central bank likely decided to ease capital controls to weaken the domestic currency, as the Russian budget depends on the ruble exchange rate within parameters set at the beginning of the year. If the ruble is too strong, the Russian government may risk running a budget deficit.
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