Russia to restrict foreign currency purchase as rouble falls to two-year low

Russia’s central bank Friday said it would temporarily restrict foreign currency purchases to ease pressure on the local currency, the rouble, after worries over fresh US sanctions sent it to a two-year low.

The rouble slumped to nearly 67 to the dollar on Friday, its lowest level since July 2016, following US plans to impose severe trade restrictions in response to the poisoning of former military intelligence agent Sergei Skripal in Salisbury.

The sell-off began earlier this week over fears of separate sanctions in the US Senate that would ban US persons from trading with Russian state banks and buying Russia’s sovereign debt.

The central bank said that the rouble’s volatility was a “natural reaction by the financial market” and said it expected it to be “temporary” because revenues from dollar-denominated exports supported the rouble.

On Friday, the central bank bought 8.4 billion roubles of foreign currency, about half of its daily purchasing volume on other days in August.

Russia spends excess revenue from sales of oil above the cost priced into the budget, about $40 per barrel, on foreign currency purchases. The central bank said it would resume buying foreign currency on that basis in the medium term.