- *RUSSIA SAID TO WEIGH CAPITAL CONTROLS IF NET OUTFLOWS INTENSIFY
Russia’s central bank is weighing the introduction of temporary capital controls if the flow of money out of the country intensifies, according to two officials with direct knowledge of the discussions.Such measures would be preventative and used only if net outflows rise significantly, the people said, who asked not to be identified because no decision has been made. They didn’t give a timeline or a level that may force such a move, saying they are looking at all possible scenarios.The discussions are the latest sign that U.S. and European sanctions are hurting Russia and rethink policies the central bank has sought to avoid. The Economy Ministry last week raised its estimate for this year’s outflows to $100 billion from $90 billion. Russia hasn’t had a net inflow of private capital since 2007, the year after lifted restrictions.Central bank Chairman Elvira Nabiullina, a former economic aide to President Vladimir Putin, said in an address to the government on Sept. 25 that “introducing capital controls doesn’t make sense.”Still, if trades restrictions — such as the U.S. and EU sanctions and Russia’s retaliatory measures — are prolonged and the tax burden rises, capital outflows will intensify. That will push the regulator to shift its focus more toward ensuring financial stability from fighting inflation and use various instruments “including non-standard” means, Nabiullina said.The central bank’s press service declined to comment. The Finance Ministry isn’t discussing such measures, Svetlana Nikitina, a spokeswoman, said by text message.
- *RUBLE WEAKENS TO BOUNDARY OF RUSSIA CENTRAL BANK’S TRADING BAND
- *RUBLE WEAKENS TO LEVEL WHERE CENTRAL BANK SAYS WILL INTERVENE
- FX payments on imports also prohibited if customs registration of goods takes more than 180 days
- Foreign investors forbidden to receive investment return from selling Ukraine securities beyond stock exchange, except govt bonds
- Foreign investors forbidden to receive dividend return on Ukrainian shares not traded in stock exchanges
- Central bank also forbids FX transactions using individual FX licenses, except placing money by cos. on accounts in foreign banks
Speaking on the sidelines of an annual investment forum in the Black Sea town of Sochi, Mr. Siluanov said the Finance Ministry wants to diversify its investment basket, and is looking for higher yields without too much risks. He said the ministry will consider buying papers issued by Brazil, India, China and South Africa, which along with Russia are known collectively as the Brics countries.“[We would like to] walk away from investing in papers of the countries that impose sanctions against us,” Mr. Siluanov said, adding that the reshuffle would be carried out gradually. He didn’t elaborate on when the first purchases of Brics debt may take place.
“Sanctions and closed access to foreign-exchange liquidity from the West” is feeding demand for dollars, Dmitry Polevoy, chief economist ING.Foreign-exchange liquidity has “virtually dried out,” with volumes sinking to about $100 million per day, compared with $1 billion to $2 billion previously, according to Natalia Orlova, the chief economist for OAO Alfa Bank in Moscow.…Companies have $22 billion in dollar-denominated payments to make in September and local banks are “anticipating demand for hard currencyfrom retailers and accumulating additional dollar liquidity,” Abdullaev said.
The Bank of Russia said Tuesday it introduced one-day currency swaps to aid banks “better management of the their short-term liquidity”.Russian banks, unable to borrow abroad, are experiencing a shortage of currency liquidity.“We see, naturally, some distortion on the (currency) swap market, which shows a structural deficit of dollars,” Russia’s Deputy Finance Minister Alexei Moiseev said Tuesday.
Russia will create a multi-billion dollar anti-crisis fund in 2015 of money destined for the Pension Fund and some left over in this year’s budget to help companies hit by sanctions, Finance Minister Anton Siluanov was quoted as saying on Monday.…Siluanov was quoted as saying by Russian news agencies that the decision to stop transferring money to the Pension Fund would hand the budget an extra 309 billion roubles ($8.18 billion US).He said not all of that sum would go into the anti-crisis fund, but that it would also receive at least 100 billion roubles of money left over in this year’s budget.“This 100 billion roubles will be added to the [anti-crisis] reserve next year, which will allow us to help our companies,” RIA news agency citied Siluanov as saying.“We are planning to create a reserve of a significant size.”It was not clear how big the fund would be.…“When a series of our partners, if they can be called that, test Russia’s strength through sanctions and all kinds of threats, it is important not to succumb to the temptation of so-called easy solutions and to preserve and continue the development of democratic processes in our society, our state,” Medvedev said in a televised speech.
Increasingly making it prohibitively expensive for Russian firms to transact in USDollars…
The national currency fell to 38.82 rubles per dollar after weakening on Monday to below 38 against the dollar for the first time.It also broke through the symbolic level of 50 rubles per euro for the first time in several months.The ruble has slumped …Continue Reading