Russia's central bank limits cash withdrawal in foreign currencies

The Central Bank of Russia (CBR) on Wednesday announced that it is imposing a temporary restriction on the withdrawal of cash in foreign currencies, local media reported.

Issuing a statement, CBR said that it is imposing a USD 10,000 limit on foreign cash withdrawals from foreign currency accounts by clients until September 9, adding that customers who want to withdraw more can take the balance in rubles, Sputnik reported.

"From March 9 to September 9, 2022, the Bank of Russia establishes the following procedure for cash withdrawal from foreign currency deposits or accounts of citizens: all customer funds on foreign currency accounts or deposits are saved and accounted for in the deposit currency, the client can withdraw up to $10,000 in cash, and the rest of the funds - in rubles at the market rate on the withdrawal day," the statement said.

The Central Bank also informed that during the period of temporary restrictions, the currency will be issued in US dollars, regardless of the currency held in the account. Other currencies will be converted into dollars at the market rate on the day of the issue, TASS reported.

"All funds are saved and accounted for in the currency in which the account or deposit was opened. The conditions for the deposit or account do not change. Interest on deposits will be calculated as usual, in the currency in which the deposit was opened," the statement.

The Central Bank also said that the new measures are unlikely to affect the majority of Russians holding a foreign currency account, as most of the accounts do not exceed the amount of USD 10,000.

"In Russian banks, about 90 percent of foreign currency accounts do not exceed the amount of $10,000, that is, 90 percent of holders of foreign currency deposits or accounts will be able to fully receive their funds in cash," the CBR said.

It said banks will not sell foreign cash to citizens while the new regulations are in place, and added that the special measures were imposed due to restrictions on the inflow of dollars to Russia imposed by Western nations.

Following Russia's invasion of Ukraine, the US and its European allies have introduced sanctions targeting several major Russian banks and high-rank Russian officials, including President Vladimir Putin, besides ousting Russia from the SWIFT financial system.

A number of countries, including Japan, South Korea, and Australia, have also slapped financial sanctions and travel bans against Russia. They are mulling new targeted penalties to freeze assets and restrict travel against Russia's most influential political and military officials.

Earlier on Tuesday (local time), Biden announced a ban on the US import of Russian energy in a bid to ramp up sanctions on Russia for invading Ukraine.