Russia Bans Citizens From Buying Dollars & Other Hard Currencies For 6 Months
Amidst its currency Ruble’s drastic fall of over 50% since the Ukraine war started, Russian government is scrambling to prevent its currency’s value from plummetingfurther
In the latest step towards that, Russia’s central bank yesterday announced that it is prohibiting citizens from using Ruble to buy dollars and other hard currencies for the next 6 months, i.e. until September 9th 2022.
“Banks will not sell hard currency to citizens during the period of the temporary order,” the central bank had said in a statement posted to its website after midnight Moscow time, and as stated by a report by TheWashingtonPost.
Russia’s central bank also said that it will also limit the amount of U.S. dollars that clients can withdraw from hard-currency accounts at Russian banks, to $10,000. Anyone wanting to withdraw more than that from a hard-currency account will have to take the balance in Ruble, said the Bank of Russia.
According to the report, these measures are designed to prevent Russians from making a run for dollars as the country’s own currency Ruble plummets to fresh lows in the wake of Western economic sanctions amidst the war, which have limited the central bank’s access to its hard currency reserves.
What Experts Say About The Move
Konstantin Sonin, a Russian economist at the University of Chicago, said “For regular people, the main impact of these measures is that they are no longer able to buy dollars, which, for everyone save millionaires, is the best financial asset to protect against inflation.”, as per the report,
TheWashingtonPost also stated that Sergey Aleksashenko, a former top official at Russia’s finance ministry and the central bank who now lives in the United States, called the move “incredible foolishness.”
He said “Apparently, the outflow of foreign currency deposits from Russian banks has exceeded the Bank of Russia’s forecasts and put under question the banks’ ability to meet their obligations,” adding that “The biggest mistake monetary authority may make in Russia is to touch private savings — if there was no bank run until now, it’s going to happen.”
Piling Pressure On Russian Economy
Over the past two weeks, the Russian economy has been hurt by a long list of Western sanctions, with its currency Ruble on the brink of collapse as well.
From Visa & Mastercard suspending operations, India’s largest public sector bank SBI stopping all transactions with sanctioned Russian entities, to LSE suspending trading in 27 companies with strong links to Russia, problems just seem to keep piling up for Russia after its invaded Ukraine on February 24th, 2022.
Now it remains to be seen what steps Russia takes to save its entire economy from a possible collapse amidst the war with Ukraine, given that sanctions against the country are showing no signs of a slowdown.