By Elena Fabrichnaya and Alexander Marrow

MOSCOW (Reuters) – Stress on international banks working in Russia and the widening scope of sanctions is aggravating international foreign money settlements in Russia and creating periodic imbalances on the home market, the central financial institution stated on Friday.

Western sanctions on Moscow over its actions in Ukraine have curbed its use of {dollars} and euros, with settlements in currencies Russia considers “pleasant” – these of nations that haven’t imposed sanctions – rising considerably.

However this rise, led by , just isn’t uniform, the central financial institution stated, creating non permanent imbalances and difficulties with international trade liquidity.

In a monetary stability evaluation, the Financial institution of Russia additionally warned of dangers from Russians accumulating funds in international banks, specifically if entry to them turns into restricted.

In 2022 and the primary quarter of 2023, Russians decreased the amount of international foreign money deposits at Russian banks by 3.1 trillion roubles ($39.9 billion), the central financial institution stated, whereas 2.6 trillion roubles was transferred to international banks’ subsidiaries.

In the meantime, restrictions on unqualified buyers’ purchases of securities of issuers from “unfriendly” international locations is contributing to people shopping for from international brokers, the financial institution stated.

“In the long run, ought to non-public buyers’ confidence within the Russian inventory market decline, there are dangers of a rise in residents’ financial savings in international devices and the outflow of funds from the Russian banking system, in addition to a discount in firms’ capacity to draw long-term financing,” the financial institution stated.

Russian banks maintain 65.6% of OFZ treasury bonds in circulation. The OFZ share in Russian banks’ belongings stood at 8.3% at first of Might and has “vital potential” for additional purchases, the financial institution stated.

However firms are additionally underneath pressure from elevated transport and different prices.

“One of many principal drivers of rising capital prices is the change in firms’ technological processes amid an absence of entry to beforehand used international tools,” the financial institution stated, with the prescription drugs, chemical compounds, rubber and plastic industries notably struggling. ($1 = 77.7205 roubles)