Putin expresses faith in the rouble, says ‘nothing drastic’ following crash

Following a temporary decline in the rouble last month, Russian President Vladimir Putin took a soothing stance on the currency’s future, indicating that the government is not planning to enact further capital controls to stabilise the currency, Bloomberg reported.

The volatility of the currency is “manageable,” according to Putin, who spoke on Tuesday at an economic conference in Vladivostok, a port city on the Pacific coast of Russia. The supply of foreign currency has been constrained, he claimed, since exporters have been “restrained” in bringing their profits home from overseas.

“We need to somehow come to an agreement with business, they have to understandand proceed from the fact that it is safer to work here,” Bloomberg quoted Putin as saying ,“Nothing drastic needs to be done.”

The debate over capital controls in Russia has been contentious, but there a limited need for restrictions on the flow of money now that the rouble is beginning to stabilise after seeing the third-largest loss among developing markets this year.

Although the rouble lost some of its gains against the dollar as Putin spoke, it is still expected to post gains for a third straight day.

Putin is still holding his yearly display in Vladivostok, which he started doing in 2015 to entice investment and establish relationships with Asia-Pacific nations.

The event has evolved to reflect Russia’s isolation despite its increasing reliance on trade with Asia; this year, the vice president of Laos was the most notable participant to attend a plenary session with Putin. Zhang Guoqing, the Vice Premier of China, was also present at the forum and spoke with Putin on Tuesday.

Prior to his meeting with Putin on Wednesday, North Korean leader Kim Jong Un came to Russia on Tuesday. It is unknown at this time whether he would attend the conference or hold talks there. One of the prominent attendees in 2022 was Min Aung Hlaing, the leader of the junta in Myanmar and a person under US sanctions for alleged breaches of human rights.

Expanding international trade, investments, and technological and scientific collaboration will be some of the forum’s themes this year, according to Putin, whose remarks were posted on the forum’s website.

Along with the decline in the value of energy export receipts and a rise in imports, a shift away from settling trade in the dollar and the euro has also reduced the flow of currency into Russia.

Late last month, when the Russian rouble briefly surpassed 100 per dollar, the topic of capital controls resurfaced in Moscow. As a result, officials decided to take informal steps to make sure there is sufficient foreign currency available in the domestic market.

Prior to the collapse of the rouble, Putin warned of the threat from rising prices and requested action to stop the movement of cash out of Russia and to lessen market volatility.

In August, when the rouble was under heavy selling pressure, the central bank declared it would stop buying foreign currencies for the remainder of the year before delivering a sharp increase in interest rates at an emergency meeting.

However, the rouble has continued to be extremely volatile, suffering from a decline in foreign commerce in the midst of a number of international sanctions related to the Kremlin’s conflict in Ukraine.

This Friday marks the next policy review by the Bank of Russia, which just increased its benchmark rate to 12 per cent from 8.5 per cent, the second straight hike and the sharpest since the days immediately following Russia’s invasion of Ukraine in February 2022.

The central bank “was forced” to implement the significant rate increase, according to Putin, in part “because inflation began to rise slightly.”

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