Russia to limit grain export to deal with currency crisis

Russia is to limit its grain exports to control a price hike in the country to help cope with the consequences of its recent currency crisis.

Tumbling oil prices and Western sanctions have led to the recent currency collapse that threaten to push the country into a severe recession. As a result, the government has been forced to help banks and consider supporting its airlines.

Russia said that the introduction of customs barrier on exports was to ensure food security.

While the announcement led to an increase in global grain prices, analysts said that world stocks of wheat and corn will prevent prices from rising.

Russian Prime Minister Dmitry Medvedev was quoted by Agence France-Presse as saying: "We had a good harvest but at the same time, due to the volatility of the ruble, prices are very advantageous and exports have risen considerably."

"We need to have minimum reserves that assure Russia’s food security. In this context, I think it is time to reflect on administrative restrictions on exports."

Russia’s Deputy Prime Minister Arkady Dvorkovich was reported by Russian news agencies as saying that the measures could be signed by Medvedev within the next 24 hours.

As cited in Bloomberg, an assistant professor at Moscow’s New Economic School said: "Russia would be losing face as an unreliable supplier. It’s one thing to restrict exports because of bad harvest, and another to do it on the account of politics, which is worse."

The value of ruble had gone down by 10% last Monday and then by 20% on Tuesday despite a massive hike in interest rates as Russian consumers lost confidence in the government’s ability to grapple with the crisis.