(Updating with further detail)
MOSCOW (AFX) - Russia lifted currency controls Saturday in a sign of new-found economic confidence less than eight years after defaulting on its massive domestic debt, devaluing its currency and wiping out its people's savings.
The controls were lifted in accordance with a government decision taken Thursday.
'Now it will be more attractive to invest in Russia -- this will increase investors' interest in Russia,' Finance Minister Alexei Kudrin said on national television, adding that he expected no capital flight from Russia to result from the reforms.
'Russian businesses can freely, without worry, without any special permit or burden, participate in investments' in other countries of the former Soviet Union or elsewhere, Kudrin said.
Kudrin added that he hopes the rouble would come into common use in transactions between companies in neighbouring ex-Soviet states -- effectively a challenge to the omnipresence of the dollar.
'When the rouble starts to be used among our trading partners, Belarussian enterprises for example will settle their accounts with Ukrainian enterprises in Russian roubles,' Kudrin told the state-run RIA-Novosti news agency.
Russian President Vladimir Putin had personally pushed for the reforms to be approved this year instead of 2007 as previously planned.
Deputy Prime Minister Alexander Zhukov said that recent moves to begin trading oil and gas in roubles would help build confidence and increase demand for the Russian currency.
Early implementation of the reforms had been made possible he said by a stable macroeconomic situation, the large gold reserves Russia had built up (worth 247 bln usd by June 23), the rouble's stability, the balancing of the budget and increased foreign investment flows.
'Foreigners will gladly put funds into the Russian economy,' Zhukov told RIA-Novosti.
Analysts however said that some points in the reform remained unclear and some controls would stay in place such as a limit on transfers intended to combat money-laundering. But most welcomed the reforms.
'By relinquishing control over the flow of capital into and out of Russia, the Kremlin is effectively taking more responsibility for its actions,' the Troika Dialog investment house said in a report.
Convertibility is also part of a 'a line-up of positive news on Russia' ahead of the July 15-17 G8 summit in Saint Petersburg, including a deal with the Paris Club of creditor countries on repayment of a 22 bln usd debt, said Alexei Bulgakov of the Aton Capital investment group. newsdesk@afxnews.com afp/jlw COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited