Preparing for possible sanctions, Russian banks imported $5 billion in foreign cash in December

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Dollars traditionally dominate those imports which, along with other currencies, many Russians like to hold as a hedge against any decline in the value of the ruble or any rise in inflation, two potential results of foreign sanctions.

Valery Piven, senior director of ACRA, told Reuters that calculations based on technical reports that banks submit each month to Russia’s central bank showed they had also imported $2.1 billion worth of foreign notes in november.

The United States is considering new sanctions against Russia, offering to withdraw some of its major banks from dollar transactions and reduce their ability to meet dollar-denominated obligations, sources told Reuters.

“The ratio of foreign currency assets and liabilities held by banks is regulated by the central bank and (currently) does not cause concern. The increase in (foreign currency) imports is more related to a possible increase in the currency demand,” Piven said. .

The Russian central bank declined to comment. But the country’s banks routinely import foreign currency in cash to meet customer demand for dollars or euros needed for overseas travel or contingencies.

Correspondent accounts

Despite heightened fears of a military conflict in Ukraine, foreign exchange imports in December are still well below the $18 billion brought to Russia at the end of 2014, when the ruble was in freefall after Moscow’s annexation of Crimea. .

Russia denies plans to attack Ukraine.

About half of Russia’s total foreign banking assets and liabilities, some $100 billion and $70 billion, respectively, are held in US dollars, according to central bank data. This figure is down from around 80% in 2002 and 70% at the start of 2014.

Major Russian banks Sberbank, VTB, VEB and Gazprombank, which were named in Monday’s Reuters report as possible targets of dollar sanctions, did not respond to requests for comment.

The Russian Finance Ministry did not respond to a request for comment.

In anticipation of possible sanctions on dollar transactions first announced by US officials a few years ago, major Russian banks have opened correspondent accounts with each other, allowing them to transfer dollars domestically, sources said, provided at least one major lender is not hit by the sanctions.

“We are aware that Washington is constantly working on drawing up new sanctions,” Kremlin spokesman Dmitry Peskov told reporters on Monday, adding that it was difficult to comment further.

The Russian Finance Ministry said last week that it would ensure that all bank liabilities, including in foreign currency, were honored if sanctions hit the financial sector, while saying there would be temporary volatility in the market. market.

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