Currency restrictions bilateral, can only be eased on mutual basis - CBR

MOSCOW. Aug 14 (Interfax) - Current restrictions on the movement of capital are primarily non-economic and bilateral in nature, and they can be eased further only on a mutual basis, the Central Bank of Russia (CBR) said in the draft guidelines for the government's unified monetary policy for 2024-2026.

The free cross-border movement of capital was restricted in 2022 in order to prevent the realization of risks for financial stability after the CBR's forex accounts were blocked and sanctions were imposed. As the risks decreased, the imposed restrictions were eased.

These measures are exclusively a policy tool to maintain financial stability, the CBR said. Their temporary use for this purpose is compatible with the strategy of inflation targeting and a floating exchange rate.

"However, maintaining extensive direct restrictions on the free movement of capital for an extended period of time can have negative long-term consequences for the economy and its growth potential," the CBR said.

The CBR recalled that it can conduct operations on the forex market in order to support financial stability. Given that part of the CBR's forex accounts are frozen, such operations can be conducted in accessible currencies, the yuan.

The ruble's exchange rate amid current restrictions is determined largely by the balance of importers' demand for foreign currency and the supply of foreign currency from exporters, the CBR said.

"As the economy adapts to imposed external sanctions, the influence of capital flows on the dynamic of the exchange rate increases. However, it remains less significant than before," the CBR said.