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. Last Updated: 07/27/2016

Reversal of Forex Rule Applauded

Proponents of freer currency trading are hailing a court ruling easing the Central Bank's grip on markets and vowed to take further legal action to dismantle what they saw as remaining restrictions.

Late Monday, the Supreme Court struck down a Central Bank instruction obliging companies to sell 50 percent of export revenues on a special trading session of eight exchanges known as the unified session.

The court ruling left intact the requirement to sell 50 percent of foreign currency earnings to the central bank, but sellers would now be free to choose their markets.

The Moscow Stock Exchange said it would press on with its legal action to remove the obligation to sell currency earnings.

The exchange's alternative foreign currency trade floor operates outside the unified session.

"This was the first step toward removing all regulations obliging private companies to sell currency, and we intend to challenge it in the Constitutional Court," said Alexei Mamontov, first vice president of the Moscow Stock Exchange.

The unified trading session is tightly controlled by the Central Bank. The policy was adopted in the months after Russia's August 1998 financial crisis, when a volatile ruble had to withstand harsh speculative attacks.

Exporters were also upset with the practice as they had to pay a 0.06 percent commission to the Moscow Interbank Currency Exchange, which accounts for the bulk of unified session volume.

MICEX declined any comment on the court's ruling.

The Central Bank said Tuesday it would appeal.

Bankers hailed the outcome.

"The change would be beneficial for companies as it would allow them to avoid paying commission and give them the right to sell currency directly to banks and their clients," said Natalya Orlova, a chief economist with Alfa Bank.

"It would also give a positive impetus to the development of the interbank currency exchange market."