MOSCOW

- The Russian Central Bank has extended its restrictions on foreign exchange withdrawals by citizens and companies for an additional six months, until September 9, 2023.

This means that citizens or companies can continue to withdraw deposits in foreign currency that were opened before March 9, 2022, but not exceeding $10,000 or its equivalent in euros.

As for the remaining deposits, they can only be withdrawn in the local currency, and according to the exchange rate specified on the day of withdrawal.

It will also remain possible to withdraw transfers in hard currencies without the need to open an account, through the so-called “electronic wallets” and in rubles only, and also at the official exchange rate of the Central Bank on the day of withdrawal.

In addition, the bank renewed the possibility for residents to withdraw cash until the ninth of September 2023 to cover travel expenses based on the announced regulations, not exceeding 5 thousand US dollars or its equivalent in euros, pounds sterling and Japanese yen, while canceling withdrawal restrictions on other currencies. .

  • Why were the restrictions extended?

    And when can it be lifted?

The Central Bank stated that the extension of the restrictions that it imposed in March 2022 came due to the foreign sanctions that are still in effect against Russia, which prohibit local financial institutions from obtaining the cash currencies of Western countries.

According to Russian economist Victor Lashin, the Central Bank's decision to extend the restrictions seems "completely logical" given that the volume of foreign currency deposits of the population in ruble bank accounts amounted to 3.7 trillion rubles (about $49 billion) as of February 1, 2023, and accordingly Sanctions will remain the main reason behind this decision, which is unlikely to be reversed as long as Western restrictions are imposed.

  • Has the Russian economy stabilized?

Lashin says, in an interview with Al-Jazeera Net, that the introduction of the Central Bank's restrictions on withdrawing cash from accounts during the past year made it possible to achieve effective stability in the Russian banking system, after imposing sanctions on all Russian banks, and separating the country's banking system from the "Swift" network.

On the other hand, Russian depositors will face, in his opinion, two types of difficulties: the first is the size of the deposits that can be withdrawn, and the other is related to the exchange rate set by the Central Bank, which is not considered attractive to customers compared to the market exchange rate.

  • Is this a prelude to replacing the dollar and the euro with other currencies?

It is noteworthy that during the year 2022 there was some depreciation of foreign currencies, which coincided with the transition from "unfriendly" currencies to alternative currencies, led by the Chinese yuan.

The share of the dollar in bank transfers decreased from 50% in the pre-crisis period to 35-40% at the end of last year and the beginning of this year, and the share of the euro from 35% to 20%. At the same time, the share of the yuan has grown sharply, as it now constitutes about 35% in the exchange market, after it constituted less than 5% a short time ago.

In this context, Bogdan Zvarich, an economic affairs analyst at the Russian "Banki Row" website, points out a significant increase in the volume of currencies traded on the Moscow Stock Exchange in rubles, and in the volume of trading in friendly currencies.

On top of these currencies is the Chinese yuan, as the volume of trading in it has increased - according to Zvarish - several times, considering it logical, given the growth of trade relations between Russia and China, and the transfer of financial settlements to national currencies.

  • What is the impact of sanctions on foreign exchange reserves?

Western sanctions deprived Russia of nearly half of the reserves with which it was planning to pay off its debts to other countries.

In numbers, Russia is no longer able to access $300 billion in gold and foreign exchange reserves, which were the most liquid part of the currency, causing difficulties in servicing the Russian debt.

On the other hand, Moscow announced - in response - that it would settle its debt obligations with foreign partners in rubles.

Zvarich says that Russia will thus have created a problem between Western investors and their governments, as US and European sanctions have obstructed international financial settlements, and therefore Western companies and investors - to recover their money - will have to come to Russia and open an account in the ruble, because it is impossible to open it abroad.

  • How is the value of the ruble affected?

3 days after Russia announced in February 2022 what it described as a "special military operation" in Ukraine, the exchange rate of the dollar rose for the first time in history above 100 rubles, trading was canceled in the stock market in Russia, and in London the value of companies collapsed. Russian.

Before the start of the recent sanctions, the prevailing in Russia was a floating exchange rate, meaning that the foreign exchange rate against the ruble was determined by market forces according to the ratio of supply and demand.

The Russian ruble has been floating since November 2014 after the central bank maintained it through a "currency corridor" and with the help of foreign exchange interventions, such as buying and selling foreign currencies.

According to economic analyst Victor Lashin, floating and fixed exchange rates have both supporters and opponents, but floating will be a compulsory passage to cut off the stage of adaptation to external factors, mitigate the effects of Western sanctions, and complete the process of full transition to alternative (friendly) markets and currencies.