Putin called on the Cabinet and the Bank of Russia to control the outflow of capital

The Russian government and the Central Bank should make more active use of their tools to reduce volatility in financial markets. In particular, it is important to control the outflow of capital and work to limit speculative demand, Russian President Vladimir Putin said at a meeting of the Council for Strategic Development and National Projects.

At the beginning of the meeting, the head of state pointed out that the ongoing fluctuations in the financial markets make it difficult for businesses and citizens to make investment decisions.

“The government and the Bank of Russia need to make more active use of the available tools, fine-tune them, taking into account the objective situation. Here, we need to work, among other things, on limiting unproductive, speculative demand in the economy, controlling the outflow of capital, monitoring the behavior of participants in the main market participants,” the president said.

Against the backdrop of the weakening of the ruble, the Central Bank decided on August 15 to raise the key rate immediately by 3.5 percentage points to 12%. The regulator explained this decision by increasing inflationary pressure and inflationary expectations, which are under pressure from the dynamics of the exchange rate. The Central Bank did not rule out a further increase in the rate in the event of increased pro-inflationary risks – the scheduled meeting will be held on September 15.

After the rate increase and against the backdrop of news about a possible tightening of foreign exchange controls by the authorities, the ruble strengthened somewhat. As Vedomosti wrote earlier, at a meeting between President Vladimir Putin and members of the government and Chairman of the Central Bank Elvira Nabiullina, it was decided not to set standards for the sale of foreign exchange earnings by exporters and impose restrictions on the movement of capital.

The government, as noted by sources, managed to informally agree with exporters to increase sales of foreign exchange earnings, so for the time being it was decided to limit themselves to monitoring their actions. Business representatives generally agreed to sell more proceeds, but if the situation does not change, the mandatory sale of export proceeds will become inevitable, one of them emphasized.