Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Central Bank Set to Liberalize Currency Sales for Exporters

The Central Bank has decided to allow exporters to sell hard currency export earnings through authorized banks, Oleg Vyugin, the first deputy head of the Central Bank, said Wednesday.

The bank previously ordered exporters to sell the mandatory 50 percent of their hard currency revenues either to the Central Bank or through the Moscow Interbank Currency Exchange.

Vyugin said by telephone that the bank did not make the decision because of a recent Supreme Court ruling that ordered it to do so. He said the court case had, in fact, hindered the bank's decision.

"We would have made this decision earlier if not for the court case. To make such a decision during the court case would have meant we agreed with the court's decision, and we do not agree," Vyugin said.

"The court threw into doubt our authority to issue instructions on the procedures for export revenue sales. Such procedures should exist and we should instruct banks on the procedures," he said.

The Central Bank has authorized a limited number of banks to handle the mandatory sale of export revenues. The Central Bank will require advanced payments from banks that wish to trade.

Business daily Vedomosti reported that the Central Bank already has selected 18 leading banks, nearly half of which are local subsidiaries of foreign banks.

The new rules will make it easier to intervene and boost liquidity and stability in the currency markets, Vyugin said.

"The volume of transactions in the currency market is growing, and the Central Bank was working in the dark," said Alexei Moiseyev, an economist at Renaissance Capital. In addition, increasing the pool of participants to authorized banks could lower the cost of selling hard currency revenues, as competition forces down commissions.

"It's liberalization, and liberalization is good," Moiseyev said.

Total liberalization, however, is still a way off.