Russia suspends foreign currency sales as ruble crashes amid economic fallout over Ukraine invasion
The new measures are some of the strictest since the Soviet times
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Russia’s central bank, faced with unprecedented sanctions and a plummeting ruble, said Wednesday it was suspending the sale of foreign currencies through September.
Between March 9 and September 9, Russian banks "will not be able to sell foreign currencies to citizens," the central bank said in a statement, adding that it will be possible to exchange cash currency for rubles at any time and any amount.
A Russian national flag above the headquarters of Bank Rossii, Russia's central bank, in Moscow, Russia, on Monday, Feb. 28, 2022. (Photographer: Andrey Rudakov/Bloomberg via Getty Images)
During that window, cash withdrawals from foreign currency accounts at Russian banks will be limited to $10,000. Any withdrawals above that amount would be converted to rubles at the current exchange rates.
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The bank said clients of all banks can still receive funds from their foreign currency deposits or accounts, but noted that it may take "several days" to bring the required amount of cash to a particular branch.
President Biden sits in the Oval Office of the White House, on March 4, 2022, in Washington. (AP Photo/Patrick Semansky, File)
These new measures, some of the strictest financial controls enacted in Russia since the Soviet era, come amid economic fallout over Russian President Vladimir Putin’s invasion of Ukraine.
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The United States and its allies have imposed crippling sanctions on Russia’s economy while many businesses, ranging from tech, to finance, to oil, have ceased operations in the country.
Russia's central bank noted that the currency controls were tightened because of the Western sanctions that froze a large share of its hard currency reserves. The crippling blow to the country's financial system prevented Russia from getting foreign cash.
Gideon Rose, a distinguished fellow in U.S. foreign policy at the Council of Foreign Relations and a sanctions expert, said the decline of the ruble was "one of the few things" Putin can do something about.
"This move is not designed to hit back but rather to try to preserve the strength of the currency," Rose said. "Still, it's too little too late – the measure may temporarily dampen the fall and perhaps stave off a next wave of defaults, but the diminished purchasing power of the ruble is here to say."
A powerful coalition of democracies announced it would cut off some Russian banks from the global payment system Swift. (Anton Vaganov/Reuters)
President Biden took matters a step further on Tuesday by ordering a ban on Russian oil imports, saying the U.S. "will not be part of subsidizing Putin’s war."
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Also on Tuesday, American credit rating agency Fitch Ratings downgraded Russia’s credit rating from a "B" to a "C" and suggested that sovereign default is imminent. The ruble has crashed to just 0.0077 against the US dollar on Tuesday.
Fox Business’ Andrew Mark Miller and The Associated Press contributed to this report.