Ban on using rubles to buy US dollars and other hard currencies, such as euro, yen, pound, Swiss franc: capital controls are increasing in Russia, with the aim of saving the ruble, which continues to collapse to new record lows in the comparisons of the greenback, and more. The latest announcement came from Russia’s central bank, which announced its decision to ban Russian citizens from using the national currency to buy hard currencies for the next six months, the Washington Post reported in the article. “Russia bars purchases of dollars by citizens in sign of hard-currency pinch”.
“Banks will not sell hard currency to citizens for the period of the temporary order,” the central bank said, according to a statement posted on its website after the
midnight Moscow time. The order will expire on 9 September 2022. The ban does not stop there. The central bank also announced that it will limit the amount of dollars that customers will be able to withdraw from their dollar accounts with Russian banks to the sum of $ 10,000. Anyone who wants to withdraw more will have to convert the money held in the account into rubles.
“For ordinary citizens, the main impact of these measures is that they will no longer be able to buy dollars which, for everyone but millionaires, is the best financial asset to hedge against inflation,” commented Konstantin Sonin, a Russian economist at the University of Chicago.
Sergey Aleksashenko, a former official of the ministry of finance of Russia and also of the Bank of Russia, who now lives in the United States, called the move “unbelievable idiocy”.
In his view, evidently “the flight of foreign currency deposits from Russian banks exceeded the Bank of Russia estimates, fueling doubts about the banks’ ability to honor their obligations,” Sonin wrote in his Substack newsletter, following the dissemination of the news. “The biggest mistake a monetary authority can make in Russia is touching private savings … if there has been no bank run so far, there will be now.”