Russian authorities are preparing for the introduction of new US sanctions, which could lead to the cessation of trading in US dollars and euros on the Moscow Exchange. The head of the Central Bank, Elvira Nabiullina, announced this in an interview with RBC.
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Nabiullina said that Russian regulators are developing scenarios in case introduction of such sanctions.
“We have been living under sanctions since 2014. Therefore, we have always assessed the risk of strengthening sanctions and worked in all directions,” said the head of the Central Bank.
According to her, the Russian authorities have an action plan in the event of a cessation of trading in the US dollar and euro on the Moscow Exchange.
“We also have an over-the-counter foreign exchange market, which provides foreign exchange trading. By the way, its share is already more than half—53% of foreign exchange trading. As for the exchange rate setting, last year we, understanding the various sanctions risks, issued an instruction where we explained how the exchange rate would then be determined. It will be established based on data on over-the-counter trading, including using bank reports,” said Nabiullina.
She assured that in this case the exchange rate of the Russian ruble will not significantly fall.
“No, I don’t think we see such risks. It depends on supply and demand. We have a fairly large volume of over-the-counter trading, many participants in it. Rather, the question is precisely about obtaining information about over-the-counter transactions, so we will use different sources. But I don’t think that this in itself can seriously affect the exchange rate,” Nabiullina added.
The Moscow Exchange is the largest stock exchange in Russia. The introduction of sanctions will lead to a sharp drop in prices for Russian stocks and bonds, as well as to a continued outflow of foreign capital.
Recall that in early November the United States imposed sanctions against the St. Petersburg stock exchange. As Kommersant writes, the sanctions led to the freezing of Russians' investments in foreign securities totaling about $3 billion.