Dollar and Euro Move from the Central Bank of Russia

The Central Bank of Russian Federation virtually declared war on other currencies. In the statement, which talked about an issue related to financial stability, they stated that the confidence in the euro and dollar as reserve money may decrease after the sanctions, and that they may apply negative interest to these currencies.

In a statement made by the Central Bank of Russia last Tuesday, it was predicted that after Western countries freeze Russian reserves, central banks may review their strategies, as a result of which the importance of the dollar and euro as global currencies may decrease, and that it may apply negative interest to the euro and dollar. Heavy sanctions imposed after Russia's invasion of Ukraine resulted in the freezing of nearly half of the country's $640 billion worth of gold and foreign exchange reserves. The bank underlined that the discussions about the seizure of frozen reserves will encourage central banks in the rest of the world, especially in Asia and the Middle East, to rethink their reserve strategies. In its statement on financial stability, the Central Bank of Russia lowered the note that "an increase in gold demand, a decrease in dollar and euro demand can be expected". At the end of last year, it is stated that the total foreign exchange reserves of the Russian Central Bank were 612.9 billion dollars, and the value of gold reserves was 131.5 billion dollars. On May 20, it is stated that the value of the country's total reserves fell to the level of 583.4 billion dollars. Emphasizing that the foreign currency liabilities of Russian banks have decreased recently, the central bank stated that customers have withdrawn their savings from their forex accounts and that the share of banks in time deposits has increased. Referring to the Chinese yuan, the bank said, “One of the consequences of the foreign currency restrictions created by the sanctions has been an increased tendency to use alternative currencies to the dollar and euro.” It was stated that last year, the ratio of foreign currency denominated assets in households' assets was 22 percent, and that the bank did not take any action to lower this ratio. On the other hand, the bank underlined that after the ban on non-residents that does not allow them to trade in the Russian markets, Russian private investors have become the guiding force in the Stock Exchange.