Russian President Vladimir Putin announced new emergency measures intended to prop up the national currency, including a ban on Russian residents transferring foreign currency abroad and forcing exporters to use the national currency.
Moscow said that the decree is in response to the U.S. and European sanctions over its actions in Ukraine, which has led to a sharp drop in the ruble, forcing the central bank to take emergency steps to stabilize the market.
“To ban starting March 1, 2022, crediting accounts in banks located outside the Russian Federation and other financial market organizations with currency by residents,” the statement read.
According to the order, any transfer of funds must only be done through bank accounts using electronic payments provided by foreign suppliers of payments services.
The Russian central bank later issued a clarification, saying the ban “only covers new loans and not servicing of existing debt.”
Russian exporters will be required to hold 80 percent of their reserves in rubles, meaning large companies such as energy giant Gazprom would have to buy the currency.
The sanctions over the weekend caused the ruble to fall to a record low, with the Russian central bank more than doubling its key interest rate to 20 percent.
The value of the ruble against the dollar is now around a third of its pre-2014 level, when Russia last intervened in Ukraine, which sparked the first round of sanctions from the West.
Since 2014, Russian banks and companies deleveraged significantly with the country’s liabilities falling by $250 billion, and of the total in external debt, $135 billion is due within one year.
This second round of new sanctions is designed to freeze Russian banks out of the international financial system and limit the ability of the central bank to use its reserves to help prop up the ruble.
The United States said on Feb. 28 that it had banned all U.S. transactions with Russia’s central bank and had frozen its reserves, while Switzerland also said it would adopt the same measures announced by the EU over the weekend.
The United States and its allies have also put individual restrictions on oligarchs and top government officials, including Putin himself.
The devaluation of the ruble is expected to fuel inflation in Russia, while the sanctions will hurt the ability of non-energy-related companies to export and import goods and services.
The massive hike in interest rates will likely raise the cost of borrowing, hitting Russian consumers and companies with debt.
The Moscow Stock Exchange was closed on Feb. 28 to forestall what is expected to be a massive sell-off of Russian equities.
