Russian President Vladimir Putin on Monday ordered a ban on foreign exchange loans and transfers by Russian residents to outside of the country, the Kremlin said on Monday, in retaliation for economic sanctions imposed on Moscow by the West. A decree signed by Putin also said that exporters would be required to hold at least 80 percent of revenue in rubles in a move to prop up the Russian economy.
Meanwhile, the Russian currency plunged about 30% against the U.S. dollar after Western nations announced unprecedented moves to block some Russian banks from the SWIFT international payment system and to restrict Russia’s use of its massive foreign currency reserves. The exchange rate later recovered ground after swift action by Russia’s central bank.
But the economic squeeze got tighter when the U.S. fleshed out the sanctions to immobilize any assets of the Russian central bank in the United States or held by Americans. The Biden administration estimated that the move could impact “hundreds of billions of dollars” of Russian funding.
U.S. officials said Germany, France, the United Kingdom, Italy, Japan, European Union and others will join in targeting the Russian central bank.
“We are in uncharted territory of throwing all these nuclear options of sanctions at Russia at the same time over the weekend,” said Elina Ribakova, deputy chief economist at the Institute of International Finance, a banking trade group. “Throwing them all together at once like this will have a very significant effect.”
Russians wary that sanctions would deal a crippling blow to the economy have been flocking to banks and ATMs for days, with reports on social media of long lines and machines running out. People in some central European countries also rushed to pull money from subsidiaries of Russia’s state-owned Sberbank after the Russian parent bank was hit with international sanctions.
Moscow’s department of public transport warned city residents over the weekend that they might experience problems with using Apple Pay, Google Pay and Samsung Pay to pay fares because VTB, another Russian bank facing sanctions, handles card payments in Moscow’s metro, buses and trams.
Entrepreneur Vladimir Vyaselov found that flights were blocked for his overseas trip on a student visa. He was considering driving to another country and flying from there.
“I have been in disagreement with the decisions of all the authorities for a very long time and that is why I store all my money only in currencies, and I am skeptical towards Sberbank, VTB, to national banks in general,” he said. “I can’t say I was ready (for sanctions) but I was as ready as possible being a citizen of the Russian Federation.”
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