The measure aims to support the national currency, which has weakened under pressure from Ukraine-related sanctions
Russian companies trading abroad must sell 80% of their foreign currency earnings and convert them into rubles, the Finance Ministry said in a statement on Monday. This decision follows the sanctions aimed at the Russian financial system following the crisis in Ukraine. It should stabilize the ruble and encourage more investment in Russia instead of moving foreign currencies abroad.
“Today, a decision will be taken to introduce a mandatory sale of foreign currency up to 80% of their income under all foreign trade agreements from February 28, 2022,“, indicates the press release.
In effect, this means that the companies concerned must now exchange a large part of their foreign exchange income into the Russian national currency in order to keep the funds in the country, so that they can be spent on national projects instead of investments. abroad. The measure was jointly presented by the Ministry of Finance and the Russian Central Bank as one of the means to ensure Russia’s economic stability in the face of Western sanctions, introduced last week after Moscow launched a military operation. in Ukraine.
Moscow describes the operation as the “demilitarization” and “denazificationof the neighboring state, while a number of Western nations see it as a “unprovokedaggression. These nations include the US, EU, Britain and a number of others. The allies have jointly hit Russia with various economic sanctions targeting the country’s economy. The US and the EU also announced on Saturday that they would freeze the assets of the Russian Central Bank.
Russia has launched its own countermeasures. Earlier on Monday, the Central Bank urgently raised the key rate from 9.5 to a record 20% a year, explaining the decision of the “drastic change” in the external conditions of the Russian economy. The Central Bank also announced additional measures to support credit institutions and recommended banks not to charge interest and penalties on loans, as well as to allow the restructuring of payments.
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