The ruble’s sharp appreciation is largely due to a drop in imports and a respective plunge of importers’ demand for foreign currency, TASS wrote quoting a Central Bank report.
The mega-regulator’s policies have also been affecting the domestic currency, only indirectly – through trends in the demand for foreign goods.
The Bank of Russia has earlier imposed capital controls including restrictions on foreign currency withdrawals. Companies are also now required to convert their export proceeds into rubles; this measure has predictably supported the domestic current’s exchange rate. However, the regulator extended the required time for export-focused companies to convert their foreign currency from three days to two months last month citing reduced risks to financial stability.
At the same time, the Bank of Russia has reaffirmed its commitment to a floating ruble exchange rate, meaning it will continue to be determined by the market.