Suspended dollar and euro trading on Moscow Exchange produces relatively calm first day after expanded U.S. sanctions

On June 13, the Moscow Exchange suspended trading in the U.S. dollar, the euro, and the Hong Kong dollar after the U.S. Treasury Department levied sanctions on the exchange itself and its subsidiary, the National Clearing Center. On day one of this new reality, the Russian market remained remarkably calm in response to the new restrictions. Meduza summarizes the results of the Moscow Exchange’s first trading session under these conditions.

Suspended trading, explained

Russia’s largest stock exchange has stopped trading in U.S. dollars and euros. What does this mean for the ruble?

6 months ago

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The ruble

On June 11, trading ended with the U.S. dollar at 89.10 rubles. The Moscow Exchange was closed on June 12 for a scheduled holiday, delaying the market’s reaction to the new American sanctions. On June 13, currency trading was suspended, and the exchange rate was determined on the over-the-counter (interbank) market (trading conducted directly between two parties, without the supervision of an exchange), which is how Russia’s Central Bank now plans to calculate the official exchange rates.

Today on the interbank market, the dollar rate reached a monthly high of 91.75 rubles, but the volume of foreign currency transactions was very low, reported Reuters. The cost of the dollar-ruble futures strengthened to 86 rubles, and trading was volatile, fluctuating significantly throughout the day, as predicted by analysts.

As a result, the Central Bank set the official rate for June 14 at 88.20 rubles per dollar, which is 81 kopecks lower than the official rate two days earlier and lower the Moscow Exchange’s closing rate in its last trading session. The euro rate also fell to 94.83 rubles.

In a statement on its official Telegram channel, the Central Bank clarified that it‘s been calculating these rates based on over-the-counter trading since October 2022, and the values in this time have deviated only slightly from the exchange rate — by hundredths of a percent. However, a Russian financier told Meduza that there’s no guarantee this synchronization will continue. He pointed out that it was previously impossible to ignore the rate determined in open trading in over-the-counter currency transactions, but the new American sanctions on the Moscow Exchange remove this benchmark.

Foreign exchange

Economic analysts were also correct that the spread between the foreign-currency buying and selling rates at exchange points jumped by several rubles. According to the Banki.ru portal, the selling rate fluctuated between 92.5 and 99 rubles, and the buying rate was between 80 and 91 rubles. Journalists at The Bell noted that Sberbank offered one of the best rates for selling cash dollars: 92.8 rubles.

However, a Moscow Times correspondent was unable to buy dollars or euros at Sberbank branches and at other banks, which may indicate a surge in public demand following reports about the new U.S. sanctions. Other publications, such as RBC Investments, reported no lines for dollars or euros at banks and exchange points in Moscow (though some lines were reported in St. Petersburg, at least). 

The new sanctions also caused problems for clients of major Russian brokers. Finam, BCS, Gazprombank Investments, and Raiffeisen halted withdrawals of dollars and euros from brokerage accounts on June 13. However, after just a few hours, Raiffeisen resumed withdrawals, except for transactions made on June 11 with settlements on June 13. Almost all brokers assured clients that full operations would resume as soon as the Moscow Exchange issued guidance. Spokespeople for BCS noted that the amount of foreign currency in clients’ accounts is small because they were warned in advance of the sanctions risks.

On Thursday evening, Russia’s Central Bank announced the suspension of morning trading sessions on the Moscow Exchange’s currency, precious metals, and derivatives markets. The new policy, which will remain in effect until revoked, means weekday daily trading won’t resume until 9:50 a.m. Moscow time. 

The stock market

The Moscow Exchange Index — a key stock market indicator that reflects changes in the value of shares in Russia’s largest and most liquid companies — opened its June 13 session with a decline of 4.39 percent, falling to 3,032.05 points, below the 3,100-point threshold it last crossed on June 3. However, during the day, the index recovered from the morning drop and was trading at 3,172.58 points by 4:39 p.m., local time, which is even higher (by 0.05 percent) than Tuesday's closing level.