President Vladimir Putin joined the central bank in ruling out measures to hinder the accelerating flow of money from Russia after speculation that policy makers are weighing the possibility of capital controls sent the ruble to a record low.
“We don’t plan to introduce currency restrictions or restrictions on the movement of capital,” Putin said today at a Moscow investment forum organized by VTB Capital.
His comments echo central bank Chairman Elvira Nabiullina, who earlier told the same conference that speculation policy makers are considering limits on capital movements is “absolutely baseless.” The bank is weighing the introduction of temporary capital controls if the flow of money out of the country intensifies, according to two officials with direct knowledge of the discussions.
Putin is fighting to rein in capital outflows, which are forecast to reach $100 billion this year compared with $61 billion in 2013 as sanctions over the conflict in Ukraine prompt investors to sell Russian assets. The country hasn’t had a net inflow of private capital since 2007, the year after it lifted restrictions.
The ruble sank 14 percent against the dollar in the three months ended Sept. 30, the worst quarter since 1999 and the biggest drop among global currencies monitored by Bloomberg. It gained 0.2 percent today in Moscow.
The central bank made “small” interventions yesterday, selling “slightly more than” $4 million, Nabiullina said. “The ruble is close to our upper boundary and we, subject to its moves, will act according to previously set rules.”
Even as the ruble has weakened to a record, the bank has pushed forward with preparations to shift to a freely floating currency, in favor of using interest rates to manage inflation, which has remained above its target for two years.
Putin, who banned some U.S and EU food imports in response to sanctions that most recently targeted the finance, energy and arms industries, said Russia will keep its economy open. Nabiullina said capital controls would undermine one of the country’s main monetary-policy achievements.
“On what principles are we basing our policy? First is the lack of limits on capital movements,” she said. “To reject that achievement, truly, may set us back many years.”