Analyst Osadchy: “Avoid purchasing “white” bills, take only “blue” ones.”
At a press conference following a meeting of the Board of Directors of the Bank of Russia on Friday, October 27, the head of the Central Bank of the Russian Federation, Elvira Nabiullina, said that currency restrictions will only affect the ruble exchange rate in the short term. And then the main factors in shaping its value relative to the dollar will be monetary policy and the dynamics of foreign trade. In addition to the destabilization of the ruble exchange rate, Russians were faced with an unexpected “innovation” from banks. They strive to buy the latest dollar bills (“blue”), and the sale of old bills (“white”) is at a discount. What will determine the price of dollars in Russian banks in the near future, Maxim Osadchiy, head of the analytical department of BKF bank, told MK.
— Theoretically, an increase in the key rate should help strengthen the national currency. However, as Satan said to Doctor Faustus, “Dry, my friend, theory is everywhere, But the tree of life is lushly green.” And now we see that the ruble continued to fall, despite the unexpectedly strong increase in the key rate to 15%. The reason is probably not only in the trade balance and not only in the demand of importers for foreign currency. The dollar rate is not a hindrance, because for these dollars Russians are buying super-cheap assets from non-residents at breakneck speed. What difference does it make for large businesses — the key rate is 15% or 25% — if you can buy the assets of non-residents leaving the Russian market at a 50% discount? And when this auction of unprecedented generosity, this new redistribution of assets is completed (the previous one was in the 90s), then the fairy tale will end, and whoever understood — well done.
— An interesting manipulation that few people pay attention to. “White” dollars (older issues) are often bought at bank exchange offices at a discount compared to “blue” ones (these are new-style bills). But banks are trying to sell to Russians mainly “white” dollars — old ones.
— Absolutely legal, you can’t undermine it. However, banks prefer not to advertise such discrimination, because information about it may negatively affect their reputation.
— This “fashion” came to us from Asia. In countries like Afghanistan, Pakistan, and even India, older $100 white bills are worth less than the latest blue bills. It comes to the point that very old “white” dollars with a large portrait are either not accepted at all, or come with a large discount.
There is nothing like this in developed countries. And there was nothing like this in Russia until last year. The reason for the difference is that before the CBO, banks did not have problems with overstocking of “non-trading” banknotes, since then it was possible to send cash dollars to American banks, and in the United States, a dollar is equal to a dollar, regardless of the year of issue. Planes constantly flew between Russia and the United States carrying stacks of cash dollars. Now these planes are not flying due to the fact that the United States has imposed an embargo on the supply of cash dollars to Russia. On March 11, 2022, American President Joe Biden signed a decree prohibiting the “export, re-export, sale or delivery directly or indirectly from the United States, as well as from individuals or legal entities of the States, regardless of their location, of banknotes denominated in US dollars, to the government of the Russian Federation.” or to any person located in our country.
—The main demand for cash dollars is from importers, as well as Russians traveling to Asia. Both need blue dollars. The demand for dollar cash is increasing due to the fact that cards issued by Russian banks are not serviced in most countries of the world. In addition, cross-border money transfers have become very difficult for Russians; businessmen have to take suitcases with dollars with them abroad.
— One of the consequences of this transformation of the Russian cash currency market was the refusal of many banks to accept cash dollars through ATMs back in the summer of this year.
ATMs used in Russian banks are mainly produced in unfriendly countries, the most popular brands are from the USA . This equipment is not configured to distinguish between types of dollars and the degree of wear of bills. Therefore, customers “feed” unusable bills to ATMs. In order to stop obviously unprofitable operations, bankers were forced to stop accepting dollars, and along with them euros, through ATMs.
— It is not difficult to assess the scale of the problem: as of July 1, the population had accumulated about $96 billion in foreign currency in cash. At least two-thirds of this volume is US dollars. Of these, at least 10% are banknotes from old issues. So we are talking about at least “discounted” 6.4 billion dollars “under the pillows” of Russians.
— Avoid buying “white” dollars. Buy only “blue” ones. And you will be happy!