Bank of Russia Reassures on Debt After Putin’s Sanctions Gambit
(Bloomberg) -- President Vladimir Putin banned all Russian residents from transferring foreign currency abroad, hardening capital controls as part of a package of retaliatory measures for U.S. and European sanctions over his invasion of Ukraine.
The steps, which take effect March 1, include a ban on payments of hard currency made to foreigners “in connection with loan agreements,” according to the text of the decree published Monday.
The central bank later issued a clarification, saying the ban “only covers new loans and not servicing of existing debt.” Some investors and economists had said the phrasing could amount to a default.
The text of Putin's decree “isn't formulated clearly enough and could be interpreted in different ways,” Dmitry Polevoy of Locko-Invest wrote in a note.
Interfax quoted a source it didn't name as saying the central bank had ordered depositories to temporarily suspend coupon and dividend payments to foreigners. That couldn't immediately be confirmed.
Anton Tabakh, chief economist at Moscow-based credit assessor Expert RA, called the Kremlin's new moves “capital controls of moderate harshness,” similar to those seen in the early 2000s in Russia.
According to the decree, from March 1, the following transactions will be among those banned:
- Foreign-exchange operations related to the provision by residents of foreign currency under loan agreements with non-residents
- Crediting by residents of foreign currency to their deposit accounts opened with banks and other financial organizations located outside Russia as well as making money transfers without opening a bank account using electronic means of payment provided by foreign payment service providers
The steps are part of a package of retaliatory measures for U.S. and European sanctions over his invasion of Ukraine. They also include restrictions on companies buying back their own stock, as well as some transfers to foreign accounts.
The U.S. and its allies have imposed sweeping sanctions on Russia's biggest banks, including the central bank, and limits on billionaires and top officials including Putin himself for the invasion of Ukraine. The moves triggered a sharp drop in the ruble and forced the central bank to take emergency steps to stabilize the market.
©2022 Bloomberg L.P.
With assistance from Bloomberg
-
Signature Play: The Classic Cocktail Is Dead. Or Is It?
Classic cocktails are disappearing from India's cocktail menus. But they're still being ordered, taught to bartenders and borrowed from. So, who's really having the last drink?
-
A New Samvat Wishlist: Inclusive Prosperity And Human Development
India has strengthened its economic foundations through infrastructure, digital access and enterprise. Its next growth chapter must deepen productivity, create better livelihoods and widen participation in prosperity.
-
Love, Sex Aur Dhokha: The Audacious Plot To Spy On Jensen Huang
A Taipei dinner, a Singapore chip buyer and a suspected Chinese asset: inside the alleged spy operation that got close to NVIDIA's Jensen Huang.
-
Ten Things I Learnt This Samvat
Patience can be a trap. Cheap stocks can stay cheap. Leverage can wipe you out. What did Samvat 2082 teach us? Niraj Shah writes on 10 lessons from the year gone by.
-
Talking Points This Week: Tech Nerves, FII Buying, And A Faraway Banking Shock
The global markets are not shining this Diwali. The exception in the large markets is, India.
-
Midterm Rally Lasted A Day. The Hard Reality Of A Divided US May Last Two Years | Opinion
Between a contested AI boom, a debt ceiling that arrives in 2027 and a president with every incentive to act alone, the next two years may prove more volatile than the first day's rally suggests.
-
Blue Wave Will Derail the AI Trade but Won't Dismantle the AI Era | Unhedged Position
The Democrats' sweep of the US Congress will see politics collide with economic forces both over the long and short term.
-
It's Time To Take The GST Council's Bet On Trust Global
Payment records can prove India's services exports, and clear, proportionate rules can bring foreign digital sellers into the tax net.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
