Capital control helped protect Russia's economy: Putin

By Al Mayadeen English
Source: Agencies
11 Apr 2023 19:59
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Putin warned that some risks to Russia's economy are still present, and that letting the situation unfold without intervention would be the wrong approach to adopt.

The national flag flies over the Russian Central Bank headquarters in Moscow, Russia May 27, 2022 (Reuters)

Russian President Vladimir Putin said on Tuesday that the law preventing foreign capital from exiting Russia has helped reduce threats to the country's financial system.

"In the second quarter of last year, the Bank of Russia and the government introduced restrictions on the export of capital. And this made it possible to reduce threats to our financial system, ensure its stability, and then, based on the outcome, some restrictions were lifted or weakened," Putin said at a meeting on economic issues.

Putin warned that some risks to Russia's economy are still present and that letting the situation unfold without intervention would be the wrong approach to adopt.

"I would like to emphasize once again — external risk factors for our economy have not gone away, and we understand this well. To relax in this case, to let the situation take its course, believing that everything will be fine by itself, would be wrong, we have no right to do this," Putin said.

At the beginning of March 2022, a week after the start of the Russian war with Ukraine, the ruble had fallen to its historic low against the dollar and the euro - a consequence of the announcement of the first Western sanctions, in particular, the freezing of the reserves of the Russian Central Bank held abroad.

In the event of a crisis, money held in foreign currencies can be used by a country to boost the value of its own currency, which the United States and Europe wanted to avoid in the case of Russia.

But the Russian Central Bank managed to counter this measure by massively raising its interest rates to 20% and imposing drastic capital controls on companies as well as on its citizens.

On April 10, the Russian Central Bank said that the share of the Chinese Yuan on the Russian exchange market increased to 39% in March.

This marks the highest share of Yuan Russia's exchange market has ever had.

On another note, the share of US dollars was recorded at 34% in March, as per the Russian Central Bank.