World Economy

Russia Tightens Forex Screws

Russia Tightens Forex Screws Russia Tightens Forex Screws

The Central Bank of Russia has implemented stricter rules on cash exchanges in the country. The policy is expected to tackle money laundering and the bankrolling of terrorism.

Starting from Sunday, the authorities require clients to provide a full name, passport details, registration place, date of birth and tax reference number, if the transaction is bigger than 15,000 rubles ($212), RT reported.

The forms are to be filled in by banks and customer information will be stored by the bank for at least five years from the date of the last transaction. Now a bank has the right to require information on the financial situation of the client, his business reputation and the origin of his money.

Previously, if the transaction was between 15,000 and 600,000 rubles, the rules required a client to give only a name and passport details.

The new law doesn’t limit foreign exchange. According to Gazprombank spokesman Yuliya Elsukova, it is aimed only at combating money laundering and terrorist financing.

According to economist Yevgeny Gontmaher, it is also a measure to curb speculative dollar exchange rates against the ruble. “I think that the Central Bank anticipates a further weakening of the ruble, and decided to stop it. Restrictive measures are introduced specifically to speed up or slow down the fall of the currency. I would say that this is an anti-inflationary measure, because the rapid decline in the ruble exchange rate increases inflation,” he said.

 At Lowest Point

The ruble has fallen to 72.47 against the US dollar, its worst exchange rate since December 17 last year. Fluctuations in the exchange rate are connected with further falling oil prices.

The euro was trading at 79.55, which is its highest level against the ruble since August 26.

During Monday trading at the Intercontinental Exchange, Brent crude prices fell to $37.03, which is 2.2% below the closing level of the previous trading session.

Herman Gref, the CEO of the largest Russian bank–Sberbank–had predicted the fall of the ruble.

“Our entire economy is dependent on the key parameter–the price of oil. Today, the price is $35-36 per barrel. We can say there will be plus or minus 10% fluctuation in the upcoming months,” Gref told Rossiya 24 TV channel on Friday.

Russian Deputy Finance Minister Aleksey Moiseev also said the end of 2015 will see a weak ruble, as it usually happens in November and December. “In summer, the ruble becomes stronger, then falls in early autumn. Then, there is growth in the middle of the autumn and another drop at the end of the year,” he said.

In the budget for 2016, Russia was working on $50 per barrel and 63.3 rubles per dollar. However, as the glut persists and oil prices continue to fall, the Kremlin is ready to revise the budget.