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Russia’s Central Bank is desperately trying to avoid a run on the fiat ruble in response to incoming sanctions measures from the EU, the United States, and their allies. And as the Ukraine crisis deepens, the bank has unleashed yet more extreme measures – which may eventually include freezing citizens’ foreign exchange funds.
Per the Russian state-run media outlet Tass, the bank has ramped up exchange rates on the USD by almost 7 rubles (around USD 0.08), with euro exchange rates also hiked by almost 0.8%. The same report noted that the Moscow Exchange’s index of leading shares had plummeted by almost a third on yesterday’s figures. Trading has since been suspended on the exchange after hitting limits below which it refuses to operate. The dollar and the euro have been trading on forex markets “at record highs,” Tass added.
However, the Central Bank’s headaches may just have begun. As reported, bitcoin (BTC) and stablecoin buying, as well as gold, have shot up both in Ukraine and Russia, with many citizens on both sides of the conflict looking to offload both the Ukrainian hryvnia and the Russian ruble.
With many conventional cash currency exchanges in Ukraine shuttering or reporting serious shortages in USD banknotes, similar situations could set to take place in Russia, and a Cold War-style USD banknote black market for fiat may emerge.
But the Central Bank is also ready to enact a more draconian solution, Tass also reported. The Central Bank was quoted as stating that it had “clear action plans for any scenario.”
Without further expanding, the bank noted that it had “decided to start making interventions in the foreign exchange market.” No official limits appear to have been set on USD and euro trading as of yet, but the Central Bank insisted that it would “ensure the maintenance of financial stability and the business continuity of financial institutions using all the necessary tools” at its disposal.
News.ru reported that some lawmakers have suggested that the government could take a step further – and even “seize people’s funds” should the West “block all foreign funds.”
The comments came from the Communist Party MP Nikolai Arefiev, who was responding to a warning from an economist who said that freezing or seizing citizens’ savings could spark a Russian economic crisis.
The MP added that Russia has some USD 640bn worth of gold and foreign exchange reserves located in overseas accounts and vaults, as well as almost USD 170bn worth of sovereign wealth fund investments. The personal wealth of Russian oligarchs – estimated at some USD 470bn – is also thought to be mainly held overseas.
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Learn more:
– Apple Pay and Google Pay to Become Unusable with Cards from Sanctioned Russian Banks
– Crypto Donations Pour into Ukraine – Here’s How You Can Contribute
– Bitcoin Fundamentals vs. Fundamentals of Geopolitics – Analysts on Ukraine War
– Ukrainians Paying Tether Premiums as Some Desperate Citizens Ditch Fiat for Crypto
– Bitcoin, the Ukraine Crisis and the Central Bankers Dilemma
– Western Allies Claim their Targetted Russian Sanctions Trump a SWIFT Ban as Russian Occupiers Near Kyiv
– Ukraine Invasion: What the West Needs to Do Now
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