Staunton, July 28 – Whenever a government takes measures to boost the exchange rate of its currency beyond what the market feels it is worth, some enterprising souls will find ways to work around its moves if they have money in one currency they want to exchange for that of another.
At the end of Soviet times and in the 1990s, this consisted of a black market in which Russians brought physical currency to dealers who would exchange it for the currencies they wanted and take a cut, a process that was referred to as a black or gray market. Now, this system has been updated, The Insider portal reports (theins.ru/ekonomika/251731
Instead of meeting someone on the street, however, Russians with money to exchange beyond the limits the Russian state permits are turning to the Internet, cryptocurrencies and even Islamic banking procedures to get around these restrictions, something that allows far larger amounts to be exchanged without the authorities being able to track them.
Undoubtedly, the Russian banking system will seek to block these channels; but their existence highlights something important: the ruble-dollar and ruble-euro exchange rates the Kremlin is reporting with such pride are artificial. If they weren’t, Russians wouldn’t be taking so much trouble and risk to end run the limits.