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Bill introduced in Russian Duma to ban circulation of US dollar

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Old 5th November 2014, 19:10
AkMike AkMike is offline
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Bill introduced in Russian Duma to ban circulation of US dollar

Russia may ban circulation of US dollar

The State Duma has been submitted a relevant bill

Moscow. Farid Akbarov – APA. Russia may ban the circulation of the United States dollar.

The State Duma has already been submitted a relevant bill banning and terminating the circulation of USD in Russia, APA’s Moscow correspondent reports.

If the bill is approved, Russian citizens will have to close their dollar accounts in Russian banks within a year and exchange their dollars in cash to Russian ruble or other countries’ currencies.

Otherwise their accounts will be frozen and cash dollars levied by police, customs, tax, border, and migration services confiscated.

After the law enters into force, it will be impossible to obtain cash dollar in Russia. The ban or termination of the US dollar will not apply to the exchange operations carried out by Russian Central Bank, the Russian government, ministries of foreign affairs and defense, the Foreign Intelligence Service and the Federal Security Service.

APA - Russia may ban circulation of US dollar

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Old 6th November 2014, 00:48
Hannia Hannia is offline
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Sinister stuff...

This just another way to destroy wealth in Russia. The ruble is suffering massive inflation, while the dollar is a store of value in comparison. So the Kremlin is trying to deny their people a stable non-inflating currency and force them to hold rubles, which are rapidly declining in value. This will likely cause even more of a run as Russians flee rubles and start dumping both Russian money and assets wholesale.

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Old 6th November 2014, 01:01
Hannia Hannia is offline
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Russian Headwinds Mounting
Oct 21, 2914 WETRADE4YOU Blog

Vladimir Putin may have won the opening battles of his conquest, but he is a long way from winning the war as the Russian economy suffers the consequences of Putin’s imperialistic ambitions. Gratitude is a great gift. It costs nothing and generally leaves a strong impression for those that receive it. However, gratitude does not seem to be part of Putin’s lexicon. Nationalism is Putin’s favorite weapon for galvanizing support. It is easy to see the effectiveness looking at the polling numbers which show he has the overwhelming support of the Russian populace. However, for Russia’s burgeoning lower class, nationalism does not put food on the table. With basic staples seeing massive inflation, national pride might shortly take a backseat to worsening economic conditions.

The upper-echelons of Russian society have also suffered under the current political situation as tit-for-tat retaliatory economic measures impede the ability to do business outside of Russia. However, the elite are fearful to speak up for fear of retribution from the government especially after watching the dismantling of Mikhail Khodorkovsky’s Yukos oil empire and subsequent imprisonment. Capital flight from Russia is reaching epic proportions as even the rich are feeling pinched by Putin’s Ukrainian adventure. Not withstanding the fear element, sanctions are also crushing private companies ability to repay debt issued in dollars. The government is also facing a difficult borrowing situation, canceling tomorrow’s bond auction as traders anticipate rate increases from the Central Bank to combat the spike in inflation. A survey of analysts is expecting rates to rise by 200 basis points, from 8% to 10% in the next 90 days. Most investors are unwilling to buy debt ahead of a projected rate increase because it will see prices of outstanding debt issues decline.

The economic chaos may dent Putin’s well-conceived plans and harm his vision of rebuilding the Russian empire. Even though the political situation in Russia remains stable, the divergence in the economic situation is cause for concern. Disconnecting from the west has already had a substantial impact on the Russian economy and pressure is mounting with the recent rout in oil prices. The question remains as to who can hold out longer in this conflict, the east or the west. The Russian economy has shown itself to be less than resilient, however Europe is also suffering the consequences with manufacturing declining and deflation creeping into the fray. Expect more losses for the ruble in the meantime as the Bank of Russia attempts to stem the slide in the currency. Already over $13 billion has been spent in October alone. The intervention has largely been an exercise of “spitting into the wind” as speculators look to topple the Russian Ruble. The ascending triangle pattern setting up in the USDRUB pair could see an upside breakout as the Bank of Russia loses control and the ruble trades at new record lows.
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Old 4th December 2014, 05:18
stepanstas stepanstas is offline
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How To Destroy A Currency, Russian Style - Forbes

Falling oil prices are bad news for Russia, too. And Russia’s government is also fighting on many fronts, both domestic and international. But the Central Bank of Russia’s strategy has been very different from that of Nigeria’s central bank. Realizing that attempting to defend the currency simply drained FX reserves to no avail, it floated the ruble in November, apparently with the full support of President Putin. Since then the ruble has been falling in parallel with the oil price. This strategy is not without cost: the CBR has had to raise interest rates sharply to counter inflation due to rising import costs, and it stands ready to raise them again. Russia is already falling into recession and there is more pain to come. But at least it sends a crucial message to markets that the central bank is in control of the situation and is backed by the political authorities. Monday’s intervention by the CBR to slow the ruble’s fall was intended to reinforce this message.

Or was it? On Monday, a senior Russian politician complained that the CBR was an “institutional enemy of the country” because it had failed to defend the value of the ruble. The Russian News Service reported that Yevgeny Fedorov, State Duma deputy and chairman of the Committee on Economic Policy and Entrepreneurship, claimed that Article 75 of the Russian Constitution outlawed the floating of the ruble and the reliance on market forces to determine its value. He called for a criminal investigation into the CBR’s behaviour:

“We have sent a request to initiate criminal proceedings against the Bank. Prosecutor General’s Office said that it is working on it, they are conducting a preliminary examination of the actions of the Central Bank”, said Fedorov.

This is total insanity. As Bulgaria knows, when the currency is under pressure and the government is distracted (or absent, in Bulgaria’s case), the only thing standing between the country and economic disaster is the central bank. If the central bank’s credibility is undermined, the currency – and with it the economy – is toast. So far, the CBR has performed well and gained the respect of financial markets. But to bring criminal charges against its Governor and officials would fatally undermine it. By trying to force the CBR to defend the ruble, Fedorov may precipitate a catastrophic economic and financial collapse.

Clearly, therefore, the CBR cannot leave itself open to accusations that it is in breach of its mandate. And if defending the currency is part of its mandate, then it must be seen to defend it. So was Monday’s intervention really to support the currency – or was it to protect the central bank?
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