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Putin to Use Conflict Timber to Strengthen Russian Ruble

Russia orders mandatory sale of foreign currency earnings


Sat 14 Oct 23

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Vladimir Putin has signed a decree to see “the mandatory sale of revenue in foreign currency received by certain Russian exporters under foreign trade agreements.

This decree impacts 43 companies from various industries, including forest products, grain, fuel, energy, black and non-ferrous metallurgy and chemicals.

The companies must repatriate and sell foreign currency proceeds on the Russian market to stabilise the ruble.

On Monday, the dollar exchange rate on the Moscow Exchange exceeded 102 rubles for the first time since March last year.

The Russian Central Bank attributed the exchange rate fall to a decrease in trade balance.

Wood Central understands that the new process will be introduced over a six-month period, with volumes and deadlines yet to be set by the government.

Additionally, companies must submit indicative plans-schedules for purchasing and selling foreign currency on the domestic market to the Bank of Russia.

First Deputy Prime Minister of Russia Andrey Belousov said the main goal of the measures was to create long-term conditions for increasing transparency and predictability in the foreign exchange market and reduce the possibility of currency speculation.

As reported in Wood Central, the foreign trade of Russian timber plunged more than 20% to 4.5 million cubic metres during the first quarter of 2023.

The drop was attributed to the EU’s sanctions against Russia over the war in Ukraine.

The EU had previously been among the largest importers of Russian timber, with Western Companies, including IKEA, Metsa Wood and Stora Enso, operating substantial production facilities in the Russian market.

Before the conflict, Russia’s total share of the global softwood lumber trade stood at 22%. In 2021, exports from Russia to Europe increased by 16% to 5.2 million cubic metres.

In July last year, the EU introduced an embargo on all Russian wood, and the US, Japan, and South Korea also introduced trade restrictions, with Japan’s imports dropping 47.7% and the US and South Korea falling 40.3% and 18.7%, respectively.

Today, more than 83% of Russia’s timber exports have gone through Chinese supply chains, with China now Russia’s distribution point to global forest markets. 

As reported exclusively by the publishers of Wood Central last year, record shipments of ply used in laminated veneer lumber were entering the overseas marketplace via China.

At the same time, Russia has strengthened its hold over the Central African Republic’s forest assets – believed to provide the regime with up to US $1 Billion a year in forest product exports with timber shipped to China and sold through international markets.

Several oligarchs with close ties to the Kremlin own Russia’s largest timber companies and together control a forested area as large as France.

Author

  • Jason Ross

    Jason Ross, publisher, is a 15-year professional in building and construction, connecting with more than 400 specifiers. A Gottstein Fellowship recipient, he is passionate about growing the market for wood-based information. Jason is Wood Central's in-house emcee and is available for corporate host and MC services.

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