Russian citizens and firms doing business abroad may soon be restricted in the amount of foreign currency they are allowed to acquire, on order from Vladimir Putin. Russia’s head of state now wants his government to cap such purchases on the domestic forex market.
President Putin Orders Russian Authorities to Limit Foreign Currency Purchases
Russian President Vladimir Putin has tasked the federal government and the central bank in Moscow to introduce a $1 billion monthly limit on the purchase of foreign currency meant to be used in transactions with entities and individuals in other countries.
According to an announcement by the Kremlin, the restrictions will apply to Russian residents buying other nations’ currencies in the domestic foreign exchange market for transfers abroad within government-approved settlements, the RIA Novosti news agency reported.
The order is part of instructions issued after a meeting on economic matters held on April 11 but published only last week. The measures will affect transactions crediting “accounts opened with banks located outside the territory of the Russian Federation.”
The deadline for imposing the limit has been set at June 1, 2023. Putin also asks the Bank of Russia and the Ministry of Finance to draft a list of cases in which the restriction would not apply.
Russia has been dealing with heavy Western sanctions imposed in response to its invasion of Ukraine in late February 2022, including freezing of its foreign currency reserves abroad and restricting its access to banking and financial services.
To prevent shortages of convertible currencies like the U.S. dollar and the euro as well as flight of capital, Russian authorities introduced foreign currency restrictions last spring and have been considering ways to circumvent the sanctions, including by de-dollarization of international trade and working on SWIFT alternatives.
Moscow has been also taking steps to legalize cross-border crypto payments. In November, Putin himself called for international settlements based on blockchain and digital currencies. In mid-May of this year, the head of the parliamentary Financial Market Committee, Anatoly Aksakov, unveiled that Russian lawmakers are preparing to adopt four bills related to cryptocurrencies by the end of July.
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