The Russian central bank banned sales of local securities by foreigners on Monday and hiked its key rate to 20 percent after the West imposed financial sanctions in response to President Vladimir Putin’s invasion of Ukraine.
Trading on the forex market was delayed for three hours this morning and was due to open at 10 a.m. local time (8 a.m. CET), while other financial markets will remain shut. On the interbank market the ruble was trading down around 30 percent at a new record low.
The central bank said it had also decided to more than double its key interest rate to 20 percent from 9.5 percent following a “cardinal change in external conditions.”
“An increase in the key rate will make it possible to ensure an increase in deposit rates to the levels necessary to compensate for the increased devaluation and inflation risks,” the central bank said. “This will help maintain financial and price stability and protect citizens’ savings from depreciation.”
While the ruble will trade, other financial markets will remain closed until further notice.
“The decision to open or not to open trading will be announced by the Bank of Russia at 13:00 Moscow time. In case of a positive decision, the auction will open at 15:00 Moscow time,” the bank said in a statement.
Respected former central banker and economist Sergei Alaksashenko said on Sunday the Western financial sanctions would hit Russia like a “financial nuclear bomb.” The measures deprive the central bank of access to most of its $630 billion in international reserves.