Kirill Chernovol, a researcher at the Gaidar Institute’s International Best Practices Analysis Department, assessed in comments to RBC how restrictions on taking cash rubles abroad might affect the Russian currency's exchange rate.
According to the expert, the impact of the restrictions will depend on the extent to which they affect the demand for foreign currency. If some people forgo or postpone transactions due to the new rules, demand for foreign currency could decline and -- all else being equal -- support the ruble. However, restrictions on the export of cash do not guarantee such an outcome on their own, as some transactions may morph into other available forms.
“If a person intended to take rubles abroad to exchange them but decided against the transaction or postponed it due to the restrictions, the demand for foreign currency would indeed decrease. However, if they opt for a bank transfer or another permitted method instead of using cash, the need for foreign currency remains. In that scenario, only the method of moving the funds changes. Therefore, it is impossible to predict in advance whether the new restrictions will have a significant impact on the ruble exchange rate. The outcome will depend on the scope of the transactions covered and the effectiveness of enforcement. The mere introduction of restrictions does not necessarily imply a substantial shift in financial flows,” emphasized Kirill Chernovol.
Kirill Chernovol added that the published data do not support linking the ruble’s depreciation in August to capital outflows via the physical export of cash to the countries in question. In August, the dollar rose by 7.2% to Rb85.60. Meanwhile, according to the Central Bank of Russia’s data, net foreign currency sales by non- financial companies fell by 15.3% to $18.8 bn, while the volume of currency purchases increased by 7.4% to Rb1.1 trillion.
“The Central Bank of Russia has no data confirming that the ruble’s weakening was specifically linked to the outflow of cash. Exchange rate dynamics are influenced by a range of factors: export earnings, import payments, interest rates and market participant expectations. Therefore, attributing the exchange rate shift to a specific channel of capital outflow without additional data available would be incorrect,” the expert explained.