Alexander Marrow and Mark Trevelyan
(Reuters) – New U.S. sanctions against Russia have forced the immediate suspension of trading in dollars and euros on its leading financial platform, the Moscow Exchange.
The exchange and central bank rushed to speak on Wednesday – a public holiday in Russia – an hour after Washington announced a new round of sanctions aimed at cutting off the flow of money and goods to support Russia’s war in Ukraine.
“In connection with the introduction of restrictive measures by the United States against the Moscow Exchange group, exchange trading and settlements on deliverable instruments in US dollars and euros have been suspended,” the central bank said.
It added that it would use data from over-the-counter trading, where trades are carried out directly between two parties rather than through a central exchange, to establish official dollar and euro exchange rates.
The central bank has reassured people that their bank deposits in dollars and euros are safe.
“Companies and individuals can continue to buy and sell US dollars and euros through Russian banks. All funds in US dollars and euros in the accounts and deposits of citizens and companies remain safe,” the message said.
The Moscow Exchange (MOEX) said trading in shares and money market transactions settled in dollars and euros would cease. The Russian National Clearing Center (NCC), which is the clearing agent of the Moscow Exchange, was also subject to sanctions.
The US Treasury said it was “targeting the architecture of Russia’s financial system, which has been reoriented to facilitate investment in its defense industry and the acquisition of goods needed for further aggression against Ukraine.”
The Central Bank of Russia has been preparing for such sanctions for about two years. In July 2022, the bank said it was modeling various sanctions scenarios with Forex market participants and infrastructure organizations.
As Forbes Russia reported, the bank is discussing a mechanism for managing the ruble-dollar exchange rate in case exchange trading is stopped in the event of sanctions against the Moscow Exchange and NCC.
The immediate impact of the US action was unclear because Russian financial markets were closed for the Russia Day holiday.
“This is bad, but expected news,” Russian broker T-Investments said on Telegram.
On Tuesday, the ruble closed at 89.10 per dollar and 95.62 per euro.
The second largest Russian exchange, SPB Exchange, came under US sanctions at the end of 2023. These sanctions forced the exchange, which specializes in trading foreign shares, to temporarily suspend trading and switch to settlements in rubles.