Ruble COLLAPSE: Russian central bank scrambles to prop up falling currency – traders panic

Ukraine: Dominic Raab hails UK economic sanctions on Russia

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Overseas trading has already seen huge loses for the ruble, reaching as little as 1.55 to the dollar on Monday after speculation of an oil embargo lead by the US mounted over the weekend. In a statement the Bank of Russia said trading on Moscow’s foreign exchange and money markets would restart on Wednesday providing potentially further opportunity for a sell off in the ruble and move towards safer currencies such as the dollar. Since markets reopened the ruble has slipped from 1.27 to the dollar to 1.33. Meanwhile the central bank confirmed stock markets would remain closed again, having been shuttered since 28 February.

The central bank is thought to be concerned of a mass sell-off in stocks which could see values plummet.

An indication has been the performance of Russian companies listed elsewhere with major firms such as Sberbank and Gazprom seeing their values collapse on the London Stock Exchange before they were suspended from trading last week.

The bank has not given an indication of when Russia’s longest stock market closure might end with updates typically being given one day ahead.

While some of Moscow’s money markets have reopened today the central bank has also introduced controls limiting the access of citizens to foreign currency.

For a period from 9 March to 9 September the Bank of Russia said banks would not sell cash to citizens, though exchanges of cash currency for rubles would be possible at any time and in any amount.

Any bank customers with foreign currency accounts meanwhile will be limited to withdrawing up to $10,000 (£7,612) a day in cash, with any remaining funds having to be withdrawn in rubles.

Withdrawals will all have to take place in dollars, regardless of whether the account is in a different currency.

The major market interventions come as Russia scrambles for ways to prop up the ruble amid severe sanctions on its central bank.

In normal times the central bank would have been able to use its significant foreign reserves to help support the struggling currency however with the majority of these frozen under sanctions it has been left with a limited array of options.

With access to foreign currencies in Russia constrained President Putin has also signed a decree for investors in ‘unfriendly countries’ to only be paid in rubles.

The list includes the US, UK and all EU member states.

Fears have now grown Russia could end up defaulting on a number of its debts.

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Ratings agency Fitch recently downgraded Russia further into junk territory giving it a C rating, typically used for countries it considers at risk of default.

Fitch said: “Further ratcheting up of sanctions and proposals that could limit trade in energy increase probability of a policy response by Russia that includes at least selective non-payment of its sovereign debt obligations.”

A key test will come on 16 March when Russia is due to pay $107million (£81.45million) in repayments on two of its bonds.

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