The ruble hit a new record low of 110 to the dollar on Wednesday as the stock market remained closed – a strategy for Russia’s reeling financial system, which has been under pressure from Western sanctions since the invasion of Ukraine.
The ruble lost 7.3% on the day to 108.60 to the dollar in Moscow trading after hitting a record low of 110 earlier. The Russian currency has lost about a third of its value against the dollar since the beginning of the year.
The currency fell by 7.1% against the euro, which was at 120.50 at the beginning of this Wednesday (2).
For the third day in a row, the ruble is losing strength outside Russia. On the electronic platform EBS, the currency has been trading at 115 per dollar, close to the historic low of 120 reached on Monday (28).
Russia responded to this move by doubling interest rates to 20% and telling companies to convert 80% of their revenues into foreign currency domestically, as the central bank, now under Western sanctions, halted foreign currency interventions.
Russian banks are excluded from Swift
On another front of pressure, the European Union announced the exclusion of seven Russian banks from the Swift interbank communication system, which supports global transactions. The information is from this Wednesday’s official EU diary.
Among the banks, which will have ten days to close their operations on Swift, is Russia’s second largest lender, VTB, as well as Bank Otrkitie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank and VEB.
A senior EU official explained that the banks on its list were chosen based on their connections to the Russian state, with public banks already subject to sanctions following Russia’s annexation of Crimea in 2014.
Sberbank, Russia’s biggest creditor, and Gazprombank were not included in the list because they are the main channels for payments for Russian oil and gas, which EU countries are still buying despite the conflict.
The EU official said it is not possible to simply allow energy-related transactions and exclude others, as Swift cannot differentiate between payment types. She added that these two banks are, however, subject to other measures.
The European Union, the United States, the United Kingdom and Canada acted on Saturday to block certain Russian banks from Swift, although they did not say at the time which creditors would be hit.
Also on Wednesday, Russian state-owned bank Sberbank announced that it was leaving almost the entire European market. The exit comes a day after the bloc’s Central Bank ordered the closure of the company’s European arm.
“By order of the European Central Bank, the Austrian Financial Market Authority issued a decision today prohibiting the licensed credit institution ‘Sberbank Europe AG’ (…) from continuing its business operations in full, with immediate effect,” the financial authority said. of Austria, whose capital is home to the European Sberbank.
The news came on Wednesday (2), the same day that the Russian state-owned company reported record annual profits. The bank had European assets worth 13 billion euros (R$75.1 billion) by the end of 2020, and operations in countries such as Austria, Croatia, Germany, Hungary, among others.
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