NewsUK joins us in crippling Russian economy with sweeping sanctions

UK joins us in crippling Russian economy with sweeping sanctions

The United Kingdom struck Russia with sanctions over Vladimir Putin.
The United Kingdom struck Russia with sanctions over Vladimir Putin.
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5:04 PM EDT, June 13, 2024

First, the United States and now the United Kingdom have imposed sanctions on the Moscow Stock Exchange. Since Thursday morning, Russia has been grappling with significant problems due to the suspension of stock trading and settlements in U.S. dollars and euros. According to an expert from OSW, Russia has been "de facto pushed back to the 1990s."

British sanctions were imposed on 40 entities, including the stock exchanges in Moscow and St. Petersburg, the National Settlement Depository, and Ingosstrakh—one of the largest insurance companies in Russia, reports Kommersant.

The list consists of 35 companies and seven individuals. These are Armen Sarkisyan (owner of S8 Capital), Denis Frolov (co-owner of the Astra group), Jakub Zakriev (former Minister of Agriculture of Chechnya and head of the Russian branch of Danone, appropriated by Russia), and Yury Denisov (head of the Moscow Stock Exchange).

Chaos in Russia

Early Thursday morning, new sanctions imposed by the West on Russia came into effect. As a result, Russian companies have been practically cut off from easy access to euros and dollars.

Companies and investors were forced to operate exclusively in the over-the-counter market, where transactions are conducted directly between two parties. This is a much less convenient and more expensive solution.

The stock exchange and Russian banks suffered. Rosbank's website stopped functioning, and Gazprombank also prevented customers from logging into their accounts. Russian banks are trying to prevent a digital "bank run," as customers seek to withdraw all their deposits, emphasized Jason Jay Smart, an American correspondent for the "Kyiv Post."

As a result, it was decided that the yuan exchange rate to the ruble would set the trend for other currency pairs - emphasized the Bank of Russia.

"The inclusion of the Moscow Stock Exchange and its subsidiaries handling transactions in sanctions has deprived the Russian Federation of the main tools for setting the market rate and has effectively pushed it back to the 1990s. The Central Bank of Russia (CBR) has halted stock trading in U.S. dollars, euros (so far, the EU has not imposed similar sanctions), and Hong Kong dollars as of June 12. Trading in other currencies, including the yuan, will continue. However, there is no clarity on how banks from third countries will react to American restrictions," assessed Iwona Wiśniewska from the Russian team at the Center for Eastern Studies in a commentary.

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