Russian government names options for business to adapt to sanctions against Moscow Exchange

Exchange trading and settlements in dollars (US and Hong Kong dollars) and euros are suspended at Moscow Exchange following the introduction of a new package of sanctions by the US on 13 June. 

The government spokesman said the situation is under control – the government and the Bank of Russia are analysing the situation on a daily basis and, in emergency situations, he said, appropriate measures will be applied to support experts and importers. The government representative also noted that the increase in the share of national currencies in payments in mutual trade allows for greater stability of settlements.

This situation allows selling dollars and euros on the over-the-counter market. Thus, the largest exporters from the relevant list should sell on the domestic market 90 per cent of the amount of currency credited to accounts in the authorised banks.

Due to the constant increase in sanctions pressure on the Russian financial sector and its foreign counterparties, international settlements require participants in foreign economic activities to be able to adapt to the new conditions without interruption. The Government, in tandem with the Bank of Russia, carries out systematic activities to organise international settlements, including in cooperation with Russian companies involved in foreign economic activity.

Participants of foreign economic activity (FEA) prefer to make settlements in roubles and currencies of partner countries, as well as to use alternative SWIFT channels for exchange of financial information.

A government spokesman said that Russia is actively co-operating with financial regulators in other countries to create an independent payment and settlement system. This includes arrangements to open correspondent accounts for banks and create channels for financial messaging that are independent of SWIFT. This approach also helps to ensure the necessary resources in national currencies for the successful execution of trade and economic transactions.

The Bank of Russia announced that it will use data from daily bank reports and information from digital OTC trading platforms to set the official dollar and euro exchange rates against the rouble.

According to Moscow Exchange, in May 2024, the share of dollar and euro transactions accounted for 51.57 per cent of all exchange transactions. Legal entities and individuals retain the ability to buy and sell dollars and euros through Russian banks. The Central Bank believes that the U.S. sanctions against Moscow Exchange will not affect the volume of foreign currency proceeds from exports to Russia.

Experts believe that the new sanctions will not have a significant impact on the exchange rate due to the introduction of an OTC mechanism. However, there is a probability that spreads and commissions for such operations will increase.