MOSCOW: The Russian rouble slid off a two-week high on Thursday after President Vladimir Putin signed a decree that the market interpreted as a potential means for export-focused companies to scale down conversion of foreign currency.
Exporters will now need to convert forex into roubles in an amount set by a government commission, the decree said, without providing details.
The move was seen as paving the way to an imminent easing of capital controls that had obliged exporters to convert 80% of their revenues into roubles after Russia sent tens of thousands of troops into Ukraine on Feb. 24. This ratio was later lowered to 50% in May.
By 1342 GMT, the rouble was 0.3% weaker against the dollar at 59.60 , earlier clipping its strongest point since May 25 of 57.4075.
It was still 0.3% stronger on the day at 63.33 versus the euro after touching a two-week high of 61.20.
Putin’s decree, that in theory could lead to a lower supply of foreign currency by exporters, could send the rouble weaker to levels of 65 to the dollar, which are more comfortable for the budget, Promsvyazbank analysts said in a note.
“This decree is a very good illustration that the dollar below 60 really hurts exporters, especially non-commodity ones, and the budget,” said Evgeny Suvorov, an analyst at CentroCreditBank.
The central bank declined to comment. The finance ministry did not immediately respond to a Reuters request for comment.
The move comes as the rouble has become the world’s best-performing currency this year, steered by capital controls for more than three months. A strong rouble dents Russia’s revenues for selling commodities abroad for foreign currency.
The central bank is now in focus as it will hold a rate-setting meeting on Friday. A rate cut could put some downside pressure on the rouble and support prices of OFZ treasury bonds.
A majority of analysts polled by Reuters expect a 100-basis-point rate cut to 10% as the bank tries to make lending more affordable amid sluggish consumer demand and a pause in inflation.
But a sharper cut to 9% was also possible as economic prospects and inflation easing give the central bank more room to manoeuvre, BCS Global Markets said.
Consumer inflation in Russia slowed to 17.10% in year-on-year terms in May from 17.83% in April, which was its highest level since January 2002, data showed on Wednesday.
Russian stock indexes were down.
The dollar-denominated RTS index fell 1% to 1,218.4 points. The rouble-based MOEX Russian index shed 1.3% to 2,288.2 points.
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