• Category: News

Rubles Pile Up in Russia As Government Seeks For Currency Assistance

Exporters in Russia are increasing their rubles as President Vladimir Putin asked them to support the country’s currency.

Rubles Pile Up in Russia As Government Seeks For Currency Assistance

The largest miner in Russia, OAO GMK and steel company PAO Severstal, are just a few of the many exporters who are exchanging their euros and dollars into Russian rubles.  The government is supporting this policy in an effort to stabilize the local currency after a massive downfall of 47% in 2014.

Amidst the currency’s downfall, the President asked Russian exporters to collaborate with the central bank to streamline their foreign exchange transactions. Many businesses are complying with the government’s call to action, an indication that the state has immense influence over the country’s economy.

Russia is currently in the muck of low oil prices, international sanctions and currency devaluation.

According to the bank’s press service, “The collaboration with exporters at the beginning of the year was important. The currency market was too narrow and too volatile. Now the market is in recovery mode and is not as dependent on export revenue sales.”

The central bank also indicated that it is only in charge of monitoring currency sales but does not set transaction targets.

The ruble has been the best-performing currency in the emergency market by the start of January and has gained 12% against the US currency.

Anton Tabakh, director at the credit rating firm RusRating said, “Export revenue sales increased toward the end of last year. This offered significant support to the ruble but is one of the main reasons why the ruble is on a steady downfall.”

One of the biggest companies to comply with the foreign exchange requirements by the government is Norilsk, owned by billionaire Vladimir Potanin. The company obtained about 30 billion rubles by the end of the December after selling its foreign currencies.

However, the company accumulated more rubles than it required and is now looking at using the money to buy shares back from investors. The company’s press service declined to comment on its currency exchange.

Another local company, POA Severstal has $1.9 billion in cash, with 42% of its cash in rubles in the last quarter of 2014. This was a massive increase up from 8% three months prior, the highest since 2011.

The steel company has not faced any major friction with the government but it is required to notify the government about its foreign exchange activities.

Other companies including OAO Lukoil, the largest private oil producer in the country also coordinates its foreign exchange activities with the central bank.

Kirill Chuyko, the head of equity research at BCS Financial Group in Moscow said all private export companies in the country have their foreign exchange activities monitored by the government and thus they have to sell their foreign currency.

Government owned companies are also complying, with OAO Rosneft, the largest oil producer in the country having already sold $93 billion garnered from oil revenues. This move is seen as the most significant effort to support the local currency. Other major exporters including United Co. Rusal and OAO Phosagro are also on the bandwagon to sell their currencies.

Trade Ruble with
24option bonus bancdebinary anyoption
Joomla SEF URLs by Artio