Russia halts dollar and euro trading due to US sanctions

The Moscow Exchange made the decision to halt dollar and euro trading on Thursday in response to the broad sanctions package announced by the United States. This move marks the end of a market that has been operating since the Cold War era. The US sanctions package targeted not only the Moscow Exchange but also other key financial entities in Russia, such as the National Clearing Center and the National Settlement Depository, which play a crucial role in facilitating the exchange of the dollar.

As a result of these sanctions, the exchange rates for the dollar have become pricier in Russia. The restriction on dollar trading at the Moscow Exchange has caused the greenback's rate to spike among local banks, with some lenders selling it for significantly higher amounts than before. The spread between buying and selling has also increased, more than doubling from pre-sanction levels at Russia's main state lender, Sberbank.

While over-the-counter transactions for dollars are still available, the costs for Russian consumers are expected to rise. Importers and exporters in the Russian market can anticipate higher prices as a result of these changes.

Russia's reliance on foreign currencies has been challenged by ongoing sanctions since 2022. The country has turned to China's currency for support, with the yuan accounting for over half of foreign currency trades in Russia last month. However, the new US sanctions may also impact yuan transactions, as Chinese lenders may be hesitant to engage with Russian banks due to the risk of secondary sanctions.

Overall, the recent developments in the foreign exchange market in Russia highlight the complex interplay between geopolitics and finance, with consequences for both Russian consumers and international financial institutions.


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