(Bloomberg) — Russia’s central bank has banned brokers from selling securities by non-residents starting today in a bid to shield the nation’s assets from sweeping Western sanctions that include penalties on the Bank of Russia.
In addition to the temporary freeze on sales on the Moscow Exchange, the central bank said the currency and repo markets would open three hours late at 10 a.m. local time, while it will assess whether to open other markets later. If a decision to open is made, it will be at 3 p.m. Moscow, according to a website statement.
The limits come after the U.S. and the European Union agreed to penalize the Bank of Russia, potentially blocking access to much of the $640 billion the government had built up to reduce its reliance on international markets. Russia’s invasion of Ukraine has spurred a flight from the nation’s markets, and the ruble was indicated 26% weaker in offshore trading on Monday as market makers from Sydney to Hong Kong pulled back.
“Russian authorities have to prevent fire-sales of Russian securities to prevent panic,” said Commerzbank AG strategist Ulrich Leuchtmann. “Something which is certainly harmful in the long run, but which Russian authorities seem to prefer given the risk of an even more significant ruble collapse.”
S&P Global Ratings lowered Russia’s score below investment grade on Friday, while Moody’s Investors Service — which rates Russia one notch above junk — put the nation on review for a downgrade. Additional measures to exclude some Russian banks from the SWIFT messaging system could further choke up the country’s banking system and the central bank announced new steps on Monday to support lenders.
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