Dollar Panic: Capital Flight from russia

russians have sharply increased money transfers to foreign brokerage accounts in an attempt to move capital out of the country before it becomes impossible to do so. From December 2024 through June, households transferred nearly 600 billion rubles to non-resident brokers – more than in the previous seven years combined. In April–June alone, monthly transfers reached 42–45 billion rubles, or over $500 million. Approximately 40% of these transfers represent actual capital flight, and within this share, three-quarters are so-called “parking solutions” – where a brokerage account replaces a foreign-currency bank account – while one-quarter is related to preparations for a possible move abroad.

This trend is driven by sanctions and Western banks’ increasingly strict attitude to russian funds, especially after the EU added russia to its blacklist of countries with poor anti-money laundering practices late last year.

In parallel, russians have resumed buying foreign currency in large quantities. In June, net foreign currency purchases by households reached 54.9 billion rubles; in May – 52.2 billion; and in April – 51.8 billion, totaling nearly 159 billion over three months – a record since the early months of the full-scale invasion of Ukraine. Citizens withdrew part of these rubles from their bank accounts: from January through July, approximately 2 trillion rubles flowed out of the banking system as cash, with 620 billion withdrawn in July alone.

russians’ anxiety is growing amid expectations that, following the state duma elections, the kremlin may tighten internal controls, up to imposing martial law or a new mobilization.

For now, banks are bringing in foreign currency cash via third countries despite sanctions on direct deliveries of dollars and euros, but if the US Congress passes a law on “hellish sanctions” against the rf, this channel will be cut off. This would lead to a shortage of foreign currency on the domestic market, and the central bank of the rb would be forced to restrict its sale. If the EU takes similar steps, the restrictions will also apply to the euro.