Russian exporters cut foreign currency sales to their lowest level on record in August after the government scrapped mandatory repatriation and sale requirements, underscoring a deepening shortage of hard currency on the domestic market.
Central bank reports sharp fall in sales
According to the financial markets risk review published by the Bank of Russia on September 7, the country’s 29 largest exporters sold just $6.2 billion in foreign currency last month, a 31% drop from July and 22% below the average of the previous three months. Average daily sales also fell 25%. Meanwhile, corporate demand for foreign currency jumped nearly 30% in August, reflecting a rebound in imports.
The imbalance between shrinking export sales and rising import demand left the market short of hard currency, intensifying pressure on the ruble despite the central bank’s key rate standing at 18%. Importers are expected to pass higher costs to consumers, fueling inflation.
Policy change drives outflows
The steep decline followed a government decree issued on August 14 that abolished foreign currency repatriation and sale rules for top exporters, effective August 22. For years, companies had been obliged to return at least 80% of their foreign earnings to Russia and sell 90% of those funds on the domestic market. The change allowed exporters to move settlements offshore, increasingly in yuan, draining liquidity from the Moscow Exchange and adding volatility.
Without regulatory compulsion, companies have been holding hard currency abroad or conducting direct settlements through foreign correspondent accounts, reflecting both distrust in the ruble and growing difficulty converting proceeds into dollars or euros amid sanctions. Payments now frequently arrive in yuan, dirhams and rupees, which are harder to repurpose and often face restrictions at foreign banks.
Inflationary and fiscal risks
The squeeze on currency supply coincides with mounting pressure on the state budget. A weaker ruble raises the cost of imports, stokes inflation, and erodes the real value of fixed social payments and government procurement. Rising borrowing needs at high interest rates increase debt servicing costs, forcing spending cuts in health care, education and regional programs. Procurement delays, higher prices for medicines and equipment, and growing arrears to suppliers are already visible risks.
For households, the weaker ruble translates into more expensive goods and services. Prices for medicines, electronics, auto parts and consumer goods are climbing as importers hedge against exchange rate swings. Saving in rubles exposes households to accelerated devaluation, while buying foreign currency has become increasingly costly. Many consumers are turning to advance purchases of goods to preserve value, reinforcing shortages and inflation.
Structural consequences
Economists warn that the removal of mandatory sales has left the government with fewer levers to manage foreign exchange flows. With liquidity draining offshore, the market is increasingly shaped by corporate decisions rather than state regulation. Official reassurances about stability stand in contrast to the structural shortage of hard currency, leaving the ruble vulnerable to external shocks from sanctions or commodity price swings.