Putin announces ban on transferring currency abroad

Russian President Vladimir Putin today banned transferring currency abroad and ordered companies with economic activities abroad in the framework of foreign trade convert 80% of your income in rublesaccording to a decree signed on Monday by the president to defend Russia from Western sanctions.

“As of February 28, residents who participate in economic activities abroad must carry out the mandatory sale of foreign currency in the amount of 80 percent of the amount of foreign currency credited in their accounts under foreign trade contracts with non-residents (…)”, indicates the decree.

The text also prohibits starting tomorrow to carry out “foreign exchange operations related to the provision by residents in favor of non-residents of foreign currency” and transfer foreign currency to accounts opened in banks and other financial market organizations outside Russia”.

All this after Russia suffered today the onslaught of new Western sanctionswhich put the Central Bank in the spotlight and include the expulsion of several banks from the SWIFT system, which resulted in the collapse of almost 30% of the ruble and forced Moscow to draw its arsenal to ensure financial stability.

Among other measures, the Central Bank of Russia (BCR) suddenly raised the interest rate from 9.5% to 20% to support financial stability and protect the savings of the population.

As well released the capital reserves accumulated by the banking system amounting to 733 billion rubles (6,963 million dollars) for consumer loans and unsecured mortgage loans in rubles and foreign currency.

In turn, it recommended to financial entities restructure your clients’ debt instead of imposing penalties or fines if your financial situation deteriorated due to the sanctions and you decided to prohibit brokers from selling foreign securities. (I)