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Russia, Hit By New US Sanctions, Halts Dollar And Euro Trading On Financial Exchange

Russia, US, sanctions, Moscow Stock Exchange
FILE PHOTO: A board showing currency exchange rates of the U.S. dollar and euro against Russian rouble is on display in a street in Moscow, Russia, REUTERS/Evgenia Novozhenina/File Photo

The US has introduced new sanctions against Russia. This has forced an immediate suspension of trading in dollars and euros on its financial marketplace, the Moscow Exchange.

Banks in Russia announce sanctions

The exchange and the central bank rushed out statements on Wednesday which is a public holiday in Russia within an hour of Washington announcing a new round of sanctions. The sanctions looked to cut the flow of money sustaining Russia’s war in Ukraine.

The central bank said. “Due to the introduction of restrictive measures by the United States against the Moscow Exchange Group, exchange trading and settlements of deliverable instruments in U.S. dollars and euros are suspended.”

It added that it would use data from over-the-counter trading to set official exchange rates for the dollar and euro.

Central bank calls for calm

The central bank reassured people that their dollar and euro bank deposits were secure.

“Companies and individuals can continue to buy and sell U.S. dollars and euros through Russian banks. All funds in U.S. dollars and euros in the accounts and deposits of citizens and companies remain safe.”

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The Moscow Exchange (MOEX) said share trading and money market trades settled in dollars and euros would cease. Russia’s National Clearing Centre (NCC), MOEX’s clearing agent, was also sanctioned.

U.S. targeting Russia’s financial system

The U.S. Treasury said it was “targeting the architecture of Russia’s financial system.”

Russia’s central bank has been bracing for such sanctions for around two years. The bank said it was modelling various sanctions scenarios with forex market participants and infrastructure organisations in July 2022.

The immediate impact of the U.S. move was not clear, with Russian financial markets closed for the Russia Day holiday. The rouble closed at 89.10 to the dollar on Tuesday and at 95.62 against the euro.

With inputs from Reuters