The loss of foreign currency by Russian banks was the most catastrophic in 13 years
Significant reduction of liquid assets in foreign currency occurred in December, when problems arose in settlements with Turkey and China
Russia's banking system continues to move toward a "currency famine" as sanctions cut off the economy from ties to Western markets and clients withdraw money abroad.
Source. This was reported by The Moscow Times.
At the end of 2023, foreign currency reserves on client accounts in Russian banks decreased by $30.9 billion, or 16%, according to the statistics of the Central Bank of the Russian Federation.
As of January 1, banks had $170.4 billion of client currency, the lowest amount since November 2010.
The amount of foreign currency on the accounts of legal entities decreased by $16.1 billion over the year, while the foreign currency accounts of individuals melted by $8.1 billion.
Over the two years of the invasion, according to the Central Bank, banks have lost $107.7 billion in foreign currency client accounts – almost 40% of the amount they held before the invasion of Ukraine.
Banks themselves are also losing foreign currency liquidity, mainly cash on accounts abroad, which is used to secure obligations to clients. At the end of the year, the volume of such bank "foreign exchange reserves" fell to $44.7 billion, the lowest level since the 2020 pandemic.
Moreover, a significant reduction in banks' liquid assets in foreign currency – by $4.2 billion at once – occurred in December, when problems arose in settlements with Turkey and China, Russia's major trading partners.
In fact, the economy is experiencing a "degradation in the volume of foreign currency resources," experts say. The volume of business of Western banks in Russia has shrunk to the levels of the Soviet era, and the inflow of major world currencies has fallen.
According to the Central Bank of the Russian Federation, last year the country earned $422.7 billion from exports. At the same time, according to the latest data from the Central Bank, only 24.7% of transactions were made in dollars and euros. Thus, the inflow of dollars and euros into the country could have amounted to about $105 billion per year. This corresponds to the level of foreign exchange earnings in 2002-03.
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