Monthly limit of $1 bln to buy FX for transactions with exiting non-residents will start from June
MOSCOW. May 22 (Interfax) - A limit on the purchase of foreign currency on the domestic Russian market for the sale of assets in Russia by "unfriendly" foreign companies should come into effect next month.
The government and Central Bank have until June 1 "to set a monthly limit of $1 billion for the purchase of foreign currency on the Russian currency market by residents for the purpose of subsequently crediting foreign currency to accounts opened with banks located outside the Russian Federation for settlements on transactions conducted on the basis of permits issued by the government's foreign investment commission, the Bank of Russia and/or the Russian Finance Ministry," according to a list of presidential instructions issued after the April 11 meeting on economic issues and published by the Kremlin on Monday.
Exceptions to this rule are possible, as the instruction provides for the possibility to determine, "if necessary," a list of cases in which the limit does not apply.
The plans to impose the $1 billion limit were reported soon after the meeting. "The limit will be one. The point is specifically so that there is no influence on the currency market. This means that, theoretically speaking, the commission allows the sale of a business for a certain sum, but forex can be purchased within a certain period so that the limit is not breached," Deputy Finance Minister Alexei Moiseyev said.
The practice of regulating currency exchange transactions as part of a given deal allowed by the subcommittee of the government commission on foreign investment chaired by Finance Minister Anton Siluanov has been in place since last year. However, initially it only applied to certain transactions; for example applications were approved on the condition that forex purchases on the domestic market were limited to a maximum of $150 million per day. Thus, purchasers of the assets of departing foreigners, even restricted by this personal limit, could affect the exchange rate if they entered the forex market at the same time.
Although the order on the overall limit was published only now and will formally only go into effect in June, the desire to follow this logic is already evident in some of the subcommittee's decisions. For example, when they gave the green light on April 17 for Avilon to buy the Russian assets of German automaker VW, the authorities restricted daily forex transactions for it to 50 million euros per day, despite the relatively low overall price of the deal of 125 million euros, a source familiar with the decision told Interfax.