Russian Banks Imported $5 Billion in Foreign Cash in December: ACRA Estimates

By Reuters
February 22, 2022 Updated: February 22, 2022

MOSCOW—Russian ratings agency ACRA estimates that the country’s banks imported $5 billion worth of banknotes in foreign currencies in December, up from $2.65 billion a year before, in a preemptive step in case of sanctions creating increased demand.

Dollars traditionally dominate such imports which, along with other currencies, many Russians like to hold as a hedge against any drop in the value of the rouble or rise in inflation, both potential outcomes of foreign sanctions.

Valery Piven, senior director at ACRA, told Reuters that calculations based on technical reports which banks submit to Russia’s central bank each month showed that they had also imported $2.1 billion in foreign banknotes in November.

“The ratio of forex assets and liabilities held by banks is regulated by the central bank and [currently] does not cause a concern. The increase in [forex] imports is more related to a possible spike in demand for cash currency,” Piven said.

Russia’s central bank declined to comment but the country’s banks regularly import foreign currencies in cash to meet demand from customers for dollars or euros needed for overseas travel or in case of unforeseen circumstances.

Correspondent Accounts

Despite heightened fears of a military conflict in Ukraine, the foreign exchange imports in December are still well short of the $18 billion brought into Russia at the end of 2014, when the rouble was in free-fall after Moscow’s annexation of Crimea.

Russian denies that it plans to attack Ukraine.

Around a half of Russia’s total banking foreign assets and liabilities, or some $100 billion and $70 billion, respectively, are held in U.S. dollars, central bank data shows. This is down from around 80 percent in 2002 and 70 percent in early 2014.

Russia’s top banks Sberbank, VTB, VEB, and Gazprombank, which were named in the Reuters report on Monday as possible dollar sanctions targets, did not reply to requests for comment.

The Russian finance ministry did not respond to a request for comment.

The United States and its European allies are poised to announce harsh new sanctions against Russia on Tuesday after President Vladimir Putin formally recognized two breakaway regions in eastern Ukraine, escalating a security crisis on the continent.

Russia’s finance ministry said last week it would ensure all bank liabilities, including in foreign currencies, would be honored should sanctions hit the financial sector, while saying there would be temporary market volatility.