Russia’s rating agency ACRA estimates that the country’s banks imported $5 billion in foreign currency notes in December, up from $2.65 billion a year earlier, in a precautionary measure in the event of sanctions that create an increase in demand.
Dollars traditionally dominate these imports, which, along with other currencies, many Russians like to keep as a hedge against any fall in the ruble’s value or rise in inflation — both potential results of foreign sanctions.
Valery Piven, senior director at ACRA, told Reuters that calculations based on technical reports that banks submit to Russia’s central bank each month showed they also imported $2.1 billion worth of foreign banknotes in November.
The United States is considering new sanctions against Russia, proposing to cut some of its major dollar-denominated banks and reducing their ability to meet dollar-denominated obligations, sources told Reuters.
“The proportion of foreign exchange assets and liabilities held by banks is regulated by the central bank and is currently not a cause for concern. The increase in imports is more related to a possible increase in demand for spot currency,” Piven said.
Russia’s central bank declined to comment. But the country’s banks regularly import foreign currency in cash to meet customer demand for dollars or euros needed for travel abroad or in case of unforeseen circumstances.
Corresponding accounts
Despite growing fears of a military conflict in Ukraine, foreign exchange imports in December are still well short of the $18 billion brought to Russia in late 2014, when the ruble was in free fall following Moscow’s annexation of Crimea.
Russia denies it plans to attack Ukraine.
About half of Russia’s total foreign bank assets and liabilities, or about $100 billion and $70 billion respectively, are held in US dollars, central bank data show. This is down from around 80% in 2002 and 70% in early 2014.
Major Russian banks Sberbank, VTB, VEB and Gazprombank, which were named in a Reuters report on Monday as possible targets for dollar sanctions, did not respond to requests for comment.
The Russian Finance Ministry did not respond to a request for comment.
In preparation for possible sanctions on dollar transactions first launched by U.S. officials a few years ago, Russia’s major banks opened correspondent accounts with each other, allowing them to move dollars domestically, sources said, as long as at least one major lender not be affected by sanctions.
“We are aware that Washington is constantly working on crafting new sanctions,” Kremlin spokesman Dmitry Peskov told reporters on Monday, adding that it was difficult to comment further.
Russia’s Finance Ministry said last week it would ensure that all bank liabilities, including in foreign currencies, would be honored if sanctions hit the financial sector, while saying there would be temporary volatility in the market.
Source: CNN Brasil
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