Named the details of the new currency restrictions from the Central Bank and the Ministry of Finance

The ruble will be protected from major transactions

The Central Bank and the Ministry of Finance are preparing new currency restrictions, this time for foreign companies leaving Russia. Under the gun were large deals to buy out their businesses, which, according to regulators, lead to a noticeable weakening of the ruble. The motive is clear: purchases of dollars and euros by non-residents in large volumes are fraught with destabilization of the domestic financial market, which means that this practice must somehow be limited. Meanwhile, there are certain logical inconsistencies in this story.

The mechanism being developed by the two departments provides for the establishment of a monthly limit on the purchase of foreign currency in transactions involving Western companies. According to Ivan Chebeskov, director of the financial policy department of the Ministry of Finance, this scheme is floating and is not tied to a specific amount.

In early April, the ruble went down, having weakened in two weeks to 81.79 per dollar and to 90.2 per euro. While oil prices rose: Brent futures rose $7.9 to $86.1 per barrel. These events coincided with the exit of the British oil and gas company Shell from the Sakhalin-2 project, the sale of 27.5% of its assets for 95 billion rubles in ruble terms and the withdrawal of more than $1 billion from Russia. Many analysts hastened to associate the situation with the ruble with the deal . However, Central Bank Deputy Chairman Alexei Zabotkin called the degree of its impact on the exchange rate exaggerated. According to him, the reason for the sharp weakening of the ruble is “passing the bottom point of export earnings”, which arose due to the December ceiling on oil prices.

In turn, Deputy Finance Minister Alexei Moiseev noted that if a foreign company does not have the required amount, and it must purchase funds on the Russian foreign exchange market, then strict conditions are imposed on the pace of purchase. The transaction in this case is divided into many tranches and minor daily purchases.

“The amount of $1.2 billion is very large: when such funds are simultaneously withdrawn from the country, the depreciation of the ruble cannot be avoided due to the low liquidity of foreign currency,” says Artem Deev, head of the analytical department at AMarkets. – That is why the regulators propose to limit the volume of tranches to smaller values: apparently, the money for the assets sold in Russia will be transferred to their former owners in parts, gradually. But it is not yet clear what specific amounts will be discussed. Everything will depend on the specific deal, its parameters and the willingness of Western business to agree to the conditions.”

It is difficult to say to what extent the sale of Shell assets affected the ruble, all talk on this topic is in favor of the poor, says financial analyst Sergei Drozdov. In his opinion, the whole story with new currency restrictions looks extremely strange and opaque.

Firstly, it is not clear why non-residents should be allowed to buy foreign currency in conditions when there is not enough of it in the country, when the foreign exchange reserves of the Central Bank and many Russian companies are blocked due to sanctions. Secondly, the Central Bank and the Ministry of Finance, having effective levers of influence on the exchange rate, can at any time strengthen it according to their own intent. At least with the help of verbal interventions. Yes, and speculators who play for the weakening of the ruble, it is easy to punish them. It seems that the new mechanism is introduced “for show”. The Ministry of Finance clearly benefits from the current course, which makes it easier to fill the deficit budget.”

“Large transactions involving non-residents can affect the exchange rate if they are carried out in the shortest possible time. For example, the volume of purchases and sales of dollars on the day of April 14 amounted to 83.46 billion rubles, according to the Moscow Exchange, – said Vladimir Kovalev, TeleTrade analyst. – One can imagine what impact the purchase of foreign currency worth 95 billion rubles would have on the market, say, in three days, 32 billion rubles a day. But the effect is blurred if you shop for a long time. And this kind of transactions happen extremely rarely, this is a one-time practice. Yes, and the buyers of the currency themselves, without the influence of the Central Bank, strive to stretch the process for many days – it’s simply more profitable that way.”

Therefore, the initiative of the Ministry of Finance and the Central Bank is more like a safety net than a real market mechanism, Kovalev summarizes. It is likely that regulators will apply restrictions as needed and in a targeted manner. Well, they will practically not affect the ruble exchange rate. As well as the choice of foreign companies – to stay in Russia or curtail business.