The Russian government has reduced to zero the requirement for mandatory repatriation and sale of foreign currency earnings by exporters, thanks to a stronger ruble and stable foreign exchange conditions, Vedomosti reported on August 14.

The decision was formalised in a decree signed by Prime Minister Mikhail Mishustin, according to a statement on the government’s website.

The measure rolls back rules introduced by Russian President Vladimir Putin in October 2023 in the aftermath of the invasion of Ukraine that required the country’s largest exporters to sell at least 40% of their foreign exchange receipts from foreign trade contracts to authorised banks and sell at least 90% of that amount on the domestic market.

The policy, the government said at the time, aimed “to ensure exchange rate stability and the sustainability of the Russian financial market.” The latest decree noted that “there are no problems with foreign exchange liquidity, and the ruble has strengthened and its exchange rate is stable.”

Russia’s economic problems have intensified recently due to an artificial economic slowdown engineered by the Central Bank of Russia (CBR) to take the edge off sticking inflation that appears to be working. While the economy is clearly cooling and narrowly avoided a technical recession in the second quarter of this year, according to the most recent data releases, some indicators are improving. International reserves are currently at an all time high of $676bn (including the $300bn frozen in Europe) and now the regulator has removed the mandatory sale of companies hard currency earnings.

Data from the Bank of Russia on August 8 showed that the country’s largest exporters increased the volume of foreign currency sales by 7% in July to $8.1bn. However, average daily net sales fell by 11% to $351mn, which the central bank attributed to the higher number of working days during the month.

The Bank of Russia added that “uniform sales of currency during the month helped smooth out exchange rate fluctuations.”

The move to end mandatory sales marks a significant shift in currency market regulation less than two years after the requirement was imposed in response to volatility in the ruble and reduced export revenues.