Russian central bank backs plan to limit currency sales as Western firms exit

Russia’s central bank said on Friday it backed plans to introduce limits on how foreign companies leaving the Russian market are able to cash out, citing concerns that multi-million dollar deals were putting pressure on the ruble.

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Scores of Western companies have abandoned or sold their businesses in Russia in the 14 months since President Vladimir Putin ordered tens of thousands of troops into Ukraine and the West imposed an unprecedented package of sanctions.

But many are still trying to exit the market after Russia ordered sales must secure approval by a government commission, and that deals in the sensitive financial and energy sector require Putin’s personal approval.

The government this month approved the sale of Shell’s former 27.5 percent stake in the Sakhalin-2 energy project to Russia’s Novatek for 94.8 billion rubles ($1.19 billion), the Kommersant newspaper reported.

Traders and analysts said that deal likely sent the Russian currency tumbling as concerns of a big jump in ruble supply spooked a market used to low liquidity.

Without mentioning any specific deals, Central Bank Governor Elvira Nabiullina said on Friday that previous transactions had been “carried out without a defined schedule and without specified limits. This sometimes led to fluctuations on the foreign exchange market.”

She said she backed proposals to introduce limits and specific timetables on foreign currency conversions as companies exit the market in the future, without providing details on what the restrictions could be.

“Such limits will help reduce volatility, because such transactions – if they are large-scale – can create short-term volatility in the foreign exchange market,” Nabiullina said at a news conference after the bank decided to hold rates at 7.5 percent.

Restrictions currently being drawn up by the government could include a daily cap or mandated timeline for selling the ruble proceeds of any exit transaction. ($1 = 79.5205 rubles)

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