By John Meyer, financial consultant. Eurasia Business News, March 8, 2022

View on the Leningradskiy Avenue, in the centre of Moscow, December 2021.

Photo credit : Swann Collins.

The Russian central bank imposed restrictions from March 9 to September 9 for withdrawal of foreign currencies from banking accounts from Russian citizens. Withdrawals amounting to more than $ 10 thousand in foreign cash currency are banned.

In Russian banks, about 90% of foreign currency accounts do not exceed the amount of $ 10 thousand, that is, 90% of holders of foreign currency deposits or accounts will be able to fully receive their funds in cash currency, reported the Bank of Russia.

During the period of these restrictive measures, the foreign currency will be issued in US dollars, regardless of the currency used in the banking account. Conversion of other currencies into the US dollar will take place at the market rate on the day of issue.

Citizens will be able to get US dollars at their bank’s cash desk.

People care called to continue keeping funds in foreign currency deposits or accounts. All funds are saved and accounted for in the currency in which the account or deposit was opened. The conditions for the deposit or banking account in foreign currency do not change. Interest on deposits will be accrued, as usual, in the currency in which the deposit was opened, explained the Bank of Russia.

Citizens will be able to open new foreign currency accounts and deposits, but it will be possible to withdraw funds from them while the temporary procedure for operations with cash currency is in force in rubles at the market rate on the day of issue.

In addition, Russian banks will not sell foreign cash currency to citizens during the period of the temporary procedure. It will be possible to exchange cash foreign currency for rubles at any time and in any volume. However, Russian consumers usually prefer to get foreign hard currency than rubles in tough time.

Depsite of the annoucement of the Bank of Russia, customers of all banks without exception can receive funds from their foreign currency deposits or accounts. Banks may need several days to bring the required amount in cash to a particular branch.

Russian citizens willing to go abroad will not be able to buy foreign cash currency from March 9 until September 9. Bank of Russia reported that citizens will the possibility to pay with the Russian payment card MIR (launched in 2015) and withdraw cash from it in the currency of the foreign countries where the Mir card is accepted. These countries would be so far Turkey, Vietnam, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, South Ossetia and Abkhazia. They use the international reception networks of Maestro, JCB and UnionPay. The list may soon include other EAEU countries.

This restrictive measure against foreign currency use in Russia may boost the local demand for gold, as Russian citizens will worry to see their savings and puchasing power be destroyed by high inflation and ban on purchase of US dollars and euros.

Read also : How to invest in gold

The financial situation of many Russian households should deteriorate in coming weeks, because of Western sanctions, high inflation and falling ruble.

Read also Russia moves to regulate crypto economy

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