By Elena Fabrichnaya and Alexander Marrow

MOSCOW (Reuters) – Stress on international banks working in Russia and the widening scope of sanctions is aggravating international forex settlements in Russia and creating periodic imbalances on the home market, the central financial institution mentioned 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 – growing considerably.

However this rise, led by , isn’t uniform, the central financial institution mentioned, creating short-term imbalances and difficulties with international alternate liquidity.

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

In 2022 and the primary quarter of 2023, Russians lowered the quantity of international forex deposits at Russian banks by 3.1 trillion roubles ($39.9 billion), the central financial institution mentioned, whereas 2.6 trillion roubles was transferred to international banks’ subsidiaries.

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

“In the long run, ought to non-public traders’ 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 mentioned.

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

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

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