Imbalance Caused by an Influx of Cash Rubles Following Currency Restrictions
Translated from Russian with the help of AI. Original: Russian version
Restrictions on the export of foreign cash have triggered a large inflow of Russian cash rubles into Kazakhstan, leaving banks with losses and fuelling dual exchange rates and a black market. Unless the problem is addressed, the imbalance will only grow.
Any restrictions create imbalances, and these ultimately cost one side or another. An imbalance has now emerged in cash rubles. In April, Kazakhstan introduced restrictions on the export of cash foreign currency. Everything except the tenge counts as foreign currency. Russia has introduced similar restrictions, with the exception that, for Russia, the ruble is not a foreign currency. As a result, a large flow of Russian cash rubles has poured into Kazakhstan.
Enterprising Russian citizens withdraw rubles in small amounts at home, travel to Kazakhstan, buy US dollars and euros of up to 10 thousand, along with various goods, and take them back. All of this cash is then deposited with banks. The banks accept cash rubles and hand out US dollars and tenge in cash. The banks cannot export rubles in excess of the equivalent of 10 thousand US dollars.
A bank cannot hold an open position in rubles: if you have no ruble liabilities, you cannot hold ruble assets, and cash is an asset. As a result, banks first have to get rid of non-cash rubles that were covered by ruble liabilities, and once those liabilities run out, they have to raise rubles on the market to meet their obligations. Holding a long ruble position is very risky, so second-tier banks typically swap dollars for rubles at a rate of around 11%. For the banks, this is a direct loss.
By my estimates, more than 50 billion cash rubles have already accumulated in Kazakhstan, which at the current exchange rate is more than KZT 350 billion. On these amounts, the banking system is losing KZT 3.2 billion per month. Cash rubles do not work in the economy and bring the country no benefit. Banks are building defensive mechanisms, ranging from bans on handling cash to fees for accepting cash rubles and negative spreads on sales of cash rubles. If this problem is not addressed, the imbalance will only grow. Given that Russian cards do not work in Kazakhstan, the flow of cash rubles will keep increasing, as will the black market. In fact, dual exchange rates for cash and non-cash rubles, along with a variety of ruble-related schemes, can already be observed.