Russia's main stock exchange on June 13 halted dollar and euro trades after the United States hit Moscow with a new package of sanctions over its military offensive in Ukraine.
The new U.S. sanctions, announced on June 12, target the Moscow Exchange, also known as MOEX, which operates Russia's largest public trading markets for equity, fixed income, derivative, foreign exchange, and money market products. The exchange also operates Russia’s central securities depository and is the country’s largest clearing house for foreign currency transactions.
The U.S. Treasury Department said it took the step after Russian President Vladimir Putin approved a series of measures to further attract capital through the Moscow Exchange from individuals and from "friendly countries."
The department said this expanded opportunities for both Russians and non-Russians "to profit from the Kremlin's war machine by making investments in Russian sovereign debt, Russian corporations, and leading Russian defense entities," including many already designated by the United States for sanctions.
SEE ALSO: For Some In Russia's Far-Flung Provinces, Ukraine War Is A Ticket To ProsperityBritain on June 13 followed the U.S. lead and announced its own sanctions targeting MOEX, saying the action was taken in coordination with the United States.
Prime Minister Rishi Sunak said the goal was to ramp up economic pressure "to bear down on Russia's ability to fund its war machine." Putin "must lose, and cutting off his ability to fund a prolonged conflict is absolutely vital," Sunak said in a statement issued as Group of Seven (G7) leaders convene for a summit in Italy.
London said the 50 new curbs were part of "coordinated action with G7 partners" and will hit the Russian financial system and suppliers supporting its military production.
Russia announced its decision to suspend “exchange trading and settlement of instruments in U.S. dollars and euros" late on June 12 after the U.S. Treasury decision.
Measures that target Russians' ability to buy and trade foreign currency typically provoke a strong reaction throughout Russia, where many people prefer to save in Western currencies.
SEE ALSO: Inside Russia's Improvised System For Mobilizing Men For The Ukraine War: An RFE/RL InvestigationThe Russian central bank sought to calm nerves by saying in its statement that companies and individuals may continue to buy and sell U.S. dollars and euros through Russian banks and ensuring Russians that all funds held in U.S. dollars in accounts "remain safe."
In addition, Kremlin spokesman Dmitry Peskov was quoted by state media on June 13 as saying the regulator was "ensuring stability in all markets.”
Many Russian companies and banks had already reduced their reliance on Western currencies in the two years since Moscow ordered troops into Ukraine, with the Chinese yuan accounting for the majority of foreign currency trades on the Moscow Exchange.
Russia's central bank had fixed the exchange rate at 89 rubles to the dollar just before the sanctions were announced. A few banks immediately hiked their exchange rates to as high as 200 rubles per dollar after the sanctions were introduced.