Central Bank head Elvira Nabiullina – unlike the last time the key rate was raised, from 7.5% to 8.5% on July 21, and she spoke in detail
about the reasons behind and prospects for the Central Bank’s policy – did not have any comments. On August 16, FX trading on the Moscow Exchange opened at 96 rubles per dollar, down from the peak of 101 rubles the day before. After the Central Bank announced the key rate hike, the ruble rallied to 95.5 before subsequently stabilizing at 93-95.
That evening, Putin’s usual meeting with the economic bloc of the government, held once every two weeks, took place. Nabiullina was absent, and judging by the official transcript
, the fall of the ruble was not discussed either. The main topic was economic development in coal-mining regions. In the “current issues” section, besides fighting fires and floods, there was only positive news: a record number of fish is being caught, the number of sports schools is rising, and a climate change monitoring system is being rolled out.
According to press reports
based on informed sources, after that, Putin met with members of the government and the Central Bank head, where Nabiullina, Oreshkin and the ministers Siluanov and Reshetnikov presented their vision of the situation in the FX market.
There are no official reports that such a meeting took place, but on August 17 the Central Bank denied
press allegations that Nabiullina suggested thinking about raising import duties to cool off demand for imports. Meanwhile, the government has not set requirements for the sale of FX earnings by exporters or imposed restrictions on the movement of capital, at least not yet.
It has been reported
that before the meeting with Putin, the cabinet had managed to informally agree with a number of large exporters to raise their FX sales. This would keep exporters free from a requirement to sell FX earnings to the Central Bank. (Immediately after the start of the war, amid the collapse of the ruble, the government obliged exporters to sell 80% of FX earnings to the Central Bank; in May 2022, this requirement was cut to 50% and in February 2023 it was canceled altogether.)
Due to a decreasing cost of energy, net sales (minus purchases) of FX earnings have recently been declining (from $7.0 billion in June to $6.9 billion in July), although the share of net FX sales in FX earnings of the largest exporters, according to the Central Bank, amounted to 88% in May and 84% in June.What happened at the ‘secret meeting?’
According to one of the sources
, at the meeting with Putin, Nabiullina explained why the decision to raise the key rate had been made, and explained that it was due not so much to the exchange rate but to heightened inflation risks.
According to Kommersant
correspondent Dmitri Butrin
, at the meeting the Ministry of Finance allegedly proposed introducing the mandatory sale of 90% of FX earnings, which would hardly be feasible without hurting complex gray-import schemes, which are being implemented with the support of the government. The same applies to the application of other measures that would hinder cross-border capital flows.
Putin performed his usual role of arbiter, this time between the “technocrats” from the Central Bank, who proposed cutting government spending, and “technocrats” from the government, who insisted on a sharp increase in the key rate.
The informal agreements between the government and business – instead of the former setting clear rules binding on all exporters, as was done in February 2022 – are an important sign of the times.