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Russia shuts forex booths, hails strong rouble

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Sept. 30, 2010, 6:10 p.m. | Russia and former Soviet Union — by Reuters

Reuters

MOSCOW, Sept. 30 (Reuters) - Russia's last foreign exchange booths, which sprang up by the thousand after the collapse of the Soviet Union, closed on Thursday, as a strong rouble and increased use of cards enabled the central bank to ban them. The stand-alone exchange booths -- usually small, windowless rooms hidden behind heavy metal doors -- will become illegal on Oct. 1, having had since April to prepare to close or re-invent themselves by offering financial services like money transfers.

"The rouble is a strong currency, despite all the fluctuations," central bank board member Mikhail Sukhov told a news briefing."You no longer need to convert your wages into foreign currency twice a month to be able to buy a fridge."

The increased popularity of credit and debit cards has also reduced the need for cash currency conversions, he added.

In the late 1990s there were more than 11,000 exchange booths but, as confidence in the rouble and the banking system increased during nearly a decade of oil-fuelled economic growth, their number fell steadily.

The global financial crisis shook, but did not destroy, confidence in the national currency. A controlled rouble devaluation by the central bank managed to avert panic and the government stepped in to prop up banks.

In May, there were less than 400 of the booths in the whole country, three-quarters of them in or near Moscow. By Sept. 28, their number had fallen to 140.

The central bank says the ban will make it easier to spot illegal operations and will reduce swindling, common in such places. Russians who want to change money can now do so legally in over 24,000 places, including bank branches. A Levada poll earlier this year showed that only 8 percent of Russians had used an exchange booth in the last 12 months, and most respondents thought the ban would not affect them. Some 79 percent of Russians prefer to keep their savings in roubles rather than foreign currency, according to pollster WCIOM.
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