Russians turned to a black market for dollars and euros as the ruble sank after Putin launched a war on Ukraine, reports said. Numerous channels on social media sites where people look to buy and sell currencies sprang up after the war began. After deals were reached, money then changed hands at train stations or other locations, including a McDonald’s. Loading Something is loading.
The ruble’s plunge and capital controls imposed by Moscow in the wake of its invasion of Ukraine have sparked a black market for US dollars and euros as Russians seek to protect their savings, according to reports.
Several chats in the Telegram messaging app have sprung up in which people in Russia are arranging to meet on the streets and other locations to buy or sell currency, according to a recent report by Mediazona, an independent Russian media outlet.
More than 2,000 people were involved in chats in Moscow, St. Petersburg, and the southern region of Kuban, with the largest one based in Russia’s capital city. Mediazone found many participants set up meetings at train stations or indicated regions where transactions could take place.
Deals often differ from official exchange rates, as capital controls sought to limit the ruble’s downside.
“I will sell $2 thousand at 132 rubles. North-West of Moscow, quick exchange,” said one message. “I will sell 200 $130 St. Petersburg Metro Ozerki,” read another. “I will sell 200 euros at the exchange price. VDNKh,” said one message, referring to Moscow’s Exhibition of the Achievements of the National Economy where there is a metro station.
Many online channels, groups and currency exchange bots popped up in the first two weeks of March filled with requests for “currency exchange” and offers to “buy dollars,” according to Russian financial daily Kommersant.
Some channels said they had up-to-date information about “possible places to buy a dollar.” In one of those channels, a poster offered a meeting with a currency exchanger near a McDonald’s to buy dollars at 150 rubles.
Law enforcement agencies told Kommersant that organizing currency exchange in social networks and message apps may fall under laws against “illegal banking,” and criminal penalties could stretch up to seven years in prison.
But the emergence of the currency black markets highlights the high demand for dollars and euros as Russians scrambled to protect their savings, marked in the early days of the war by long lines at bank ATMs.
The ruble’s value sank after Russia launched its war against Ukraine on February 24, driving the currency below 1 cent against the greenback. The Kremlin imposed a range of capital controls to halt sharp currency outflows, such as banning Russians from transferring foreign currency overseas and requiring exporters to sell 80% of their foreign exchange revenue.
The ruble has since rebounded to nearly pre-invasion levels due in part to foreign-currency inflows from energy sales, which largely avoided Western sanctions. But the Kremlin’s controls on the ruble have kept traders and analysts skeptical of its rally.
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