The ruble plunged almost 30% against the dollar and the euro on the Forex market today after the announcement of the exclusion of some banks from the SWIFT international interbank communications system and the European Union’s (EU) freezing of transactions with the Central Bank of Russia (CBR).

Shortly after 09.00 local time (06.00 GMT) the ruble lost 28.34% against the greenback, whose exchange rate stood at 107.48 dollars per ruble. The Russian currency fell by 27.02% to 119.8 euros per ruble.

In the case of the dollar, this is a record fall since at least 1993, and in the case of the euro it is the biggest plunge since at least 1994.

The exchange rate of the ruble began to fall in the face of the military offensive launched last Thursday by Russia in Ukraine. On that day the Moscow Stock Exchange plunged more than 33%.

In a first move the West sanctioned several Russian banks and sovereign debt, and in a second one decided to exclude some financial entities from SWIFT.

Russia’s Central Bank tries to stem the bleeding

The Central Bank of Russia (CBR) today announced a series of measures to ensure the liquidity of the country’s banks affected by Western sanctions, such as the release of accumulated capital reserves worth 733 billion rubles (€6.245 billion or $6.963 billion) for consumer loans and mortgages.

In addition, it grants sanctioned banks the ability to make a decision on non-deterioration of the assessment of the financial situation of their clients when creating loss reserves, if the borrower’s financial situation worsened after February 18 and is due to the effect of the sanctions.
Moreover, the CBR decided to prohibit brokers from selling securities of foreign companies or individuals.

The Central Bank instructs “professional participants in the securities market engaged in brokerage activities” from 07.00 am on February 28 “and until the cancellation of this order to suspend the execution of all orders from clients – foreign individuals and legal entities for the sale of securities,” says the document, signed by the vice-president of the regulatory body, Philip Gabunia.

The stock exchange starts normal trading at 06.50 (03.50 GMT), but the BCR said in a second statement that operations on the foreign exchange market, the money market and the repo market on the Moscow trading floor will open at 10.00 (07.00 GMT) this Monday.

That said, it clarifies that it still evaluates the feasibility of opening operations on other markets, depending on the development of the situation.

The Bank of Russia is also introducing a temporary ban on brokers from executing transactions to sell securities on behalf of non-residents from February 28, 2022.
The CBR is taking these measures after the US, the European Union (EU) and other partners sanctioned several banks in the face of the war launched by Russia in Ukraine and decided in a second step to exclude some Russian banks from the SWIFT international interbank communications system.

The EU also formalized last night the freezing of transactions with the Central Bank of Russia, an unprecedented blow to the country’s economy in response to the invasion of Ukraine.

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