U.S. sanctions halt dollar and euro trading on Moscow Exchange

New U.S. sanctions against Russia have led to the immediate suspension of trading in dollars and euros on the Moscow Exchange (MOEX), the country’s largest exchange group.

The exchange and the central bank quickly issued statements on Wednesday, despite it being a public holiday in Russia, following Washington’s announcement of new sanctions aimed at disrupting the flow of money and goods to support Russia’s war efforts in Ukraine.

“Due to the introduction of restrictive measures by the United States against the Moscow Exchange Group, exchange trading and settlements of deliverable instruments in U.S. dollars and euros are suspended,” the central bank stated.

This suspension means banks, companies, and investors can no longer trade these currencies via a central exchange, which typically offers advantages in terms of liquidity, clearing, and oversight. Instead, they will now have to trade over-the-counter (OTC), where transactions are conducted directly between two parties. The central bank indicated it would use OTC data to set official exchange rates.

Many Russians hold part of their savings in dollars or euros, mindful of past crises that have devalued the rouble. The central bank assured the public that these deposits remain secure.

“Companies and individuals can continue to buy and sell U.S. dollars and euros through Russian banks. All funds in U.S. dollars and euros in the accounts and deposits of citizens and companies remain safe,” it said.

A representative from a large, non-sanctioned Russian commodities exporter told Reuters: “We don’t care, we have yuan. Getting dollars and euros in Russia is practically impossible.”

As Moscow strengthens trade and political ties with Beijing, the Chinese yuan has surpassed the dollar as the most traded currency on the Moscow Exchange, accounting for 53.6% of all foreign currency trades in May.

Dollar-rouble trading volume on MOEX typically amounts to around 1 billion roubles ($11 million) daily, while euro-rouble trading is around 300 million roubles. In contrast, yuan-rouble trading now regularly exceeds 8 billion roubles daily.

MOEX reopened trading following the bourse shutdown since February 2022 after the US and its Western allies unleashed a barrage of sanctions against Russia that crippled its economy and tanked the value of its national currency.