MOSCOW (Reuters) – Increased pressure and sanctions on foreign banks operating in Russia have worsened foreign currency payments in Russia, creating cyclical imbalances in the domestic market, the central bank said on Friday. Announced.
Western sanctions against Russia over its actions in Ukraine curtail Russia’s use of dollars and euros, resulting in a significant increase in payments in currencies that Russia deems “friendly,” i.e. those of countries that do not impose sanctions. bottom.
But the Chinese yuan-led rise has been uneven, causing temporary imbalances and foreign currency liquidity difficulties, the People’s Bank of China said.
In its financial stability review, the Bank of Russia also warned of the risks of Russians accumulating funds in foreign banks, especially if access to foreign banks were restricted.
Russians will reduce foreign currency deposits in Russian banks by 3.1 trillion rubles ($39.9 billion) in 2022 and the first quarter of 2023, with 2.6 trillion rubles transferred to subsidiaries of foreign banks, according to the central bank was done.
Meanwhile, restrictions on buying securities of “unfriendly” country issuers by ineligible investors have contributed to individuals buying from foreign brokers, the bank said.
“In the long term, a decline in private investor confidence in the Russian stock market could lead to an increase in people’s savings in foreign goods, a risk of an outflow of funds from the Russian banking system, and an increase in the amount of corporate assets under management. There is also a risk that the market will decline,” the bank said.
Russian banks hold 65.6% of outstanding OFZ government bonds. The OFZ accounted for 8.3% of Russian bank assets as of early May and had a “great potential” for further purchases, the bank said.
However, businesses are also being burdened by increased transportation and other costs.
“One of the main factors behind the rising cost of capital is changes in the technological processes of companies as they can no longer use overseas facilities that they used to use,” the bank said, adding that the companies in the pharmaceutical, chemical, rubber, The plastics industry is particularly struggling, he said. (1 dollar = 77.7205 rubles)
Reporting by Elena Fabrichnaya and Alexander Marrow.Editing: Alex Richardson
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