Russian Authorities Continue Anti-Dollar Narrative

Russian authorities and a leading brokerage have again continued their anti-dollar narrative, voicing concerns about individual and corporate holdings of U.S. dollars and other perceived “unfriendly” currencies, calling for their conversion into alternative currencies and assets.

Western countries imposed unprecedented sanctions against Russia after it sent tens of thousands of troops into Ukraine on Feb. 24, impairing Moscow’s access to international economic and global trading systems.

Sanctions have frozen around half of Russia’s international reserves managed by the central bank, which on Thursday recommended ordering state companies to transfer their FX holdings in currencies of countries that have targeted Moscow with sanctions to those that have not.

“The blocking of Russian assets by unfriendly countries, as well as operational restrictions on settlements in the world’s major reserve currencies, create risks for citizens and businesses when using the U.S. dollar and the euro,” the central bank said in a statement.

Russia calls countries that have deployed sanctions “unfriendly.” Russian households held around $85 billion worth of a dollar and euro cash, Central Bank Governor Elvira Nabiullina said in July, adding that cash dollars will circulate in Russia even “under the most apocalyptic scenario.”

The finance ministry shared the central bank’s concerns about corporate holdings of “unfriendly” currencies.

The bank also said it would introduce additional measures to reduce banks’ operations in dollars and euros, accelerating a de-dollarisation drive that officials hope can help shield Russia’s economy and citizens from some restrictions.

Yury Maslov, head of Otkritie Investment brokerage, part of Otkritie Group that was targeted with sanctions, said the company was minimizing the share of dollars in its clients’ portfolios, who retain the ability to buy and sell the greenback for now.

“Euros can only be sold, not bought. Over time, dollars, too, will be available for selling, and eventually, neither will be available for selling,” Maslov told a meeting with Otkritie’s brokerage clients in the Marriott Hotel in central Moscow.

“This applies to the perimeter of Russia as a whole. I recommend reducing the amount of dollars. Buy Eurobonds, the yuan, the Hong Kong dollar … anything. But there is a high risk that the dollar will at some point no longer be a currency that can be easily converted.”

The central bank also told companies it was necessary to resume publishing financial statements while minimizing sanctions risks.