- The Kremlin is imposing new de facto capital controls to help lift the ruble, the Financial Times reported.
- Western firms exiting Russia must sell assets in rubles or else face delays and perhaps losses to transfer dollars or euros abroad.
Russia is imposing new de facto capital controls, representing another attempt to help lift its sagging ruble, the Financial Times reported.
Western firms looking to exit Russia's markets must sell their holdings in rubles instead of dollars or euros, sources told the FT. If sellers continue to hold out, they could face delays and possible losses on transfers of the Western currencies abroad.
The new policy looks to generate added demand for the ruble, which has tumbled more than 20% against the dollar this year. Earlier this month, the ruble broke through the psychologically-important 100 threshold, prompting President Vladimir Putin to call for tighter regulation.
On Tuesday, the ruble fell 0.5% to 93.02 to the US dollar.
But a banker involved in Western businesses fleeing Russia was skeptical about the new currency restrictions, telling the FT, "It's like applying a Band-Aid to gangrene."
And it's leaving firms in a bind.
After being paid in rubles, one Western seller cited few good options: "In the first case, the exchange rate is terrible and it is difficult to exchange large quantities. In the second case, it is difficult to find a bank that will accept the money."
The new rule adds to earlier limits set up by the Kremlin. After a renewed ruble slide in June, exiting companies were limited in the way they could take sale proceeds. They could either transfer the funds to highly restricted Russian bank accounts, or have the proceeds wired through a number of installments.
Earlier this month, Putin signed off on an order that forced exporting firms to sell part of their foreign currency in the domestic market.
Meanwhile, the Bank of Russia has raising interest rates an unexpected 200 basis points on Friday, helping lift the ruble briefly.
That followed a rate hike in September as well as increases in August and July, as the central bank sought to tamp down high inflation caused by Russia's war on Ukraine or the effects of related sanctions.