Russia responds to Western sanctions

Russian President Vladimir Putin signed a decree to take special measures in response to economic sanctions from Western countries. The text of the document is published on the Kremlin website.

The decisions were made "in connection with unfriendly actions that the United States of America, foreign states and international organisations have taken contrary to international law to introduce restrictive measures against citizens of the Russian Federation and Russian legal entities, in order to protect the national interests of the Russian Federation."

Under the new decree, starting from February 28, Russian exporters are required to sell 80 percent of foreign exchange earnings. The Russian Finance Ministry announced such a move a bit earlier.

Residents are prohibited from carrying out foreign exchange transactions to provide foreign currency to non-residents. Residents are prohibited from crediting foreign currency to their accounts (deposits) opened with banks located outside the territory of the Russian Federation.

In a nutshell, one will not be allowed to credit foreign currency to their accounts and deposits in foreign banks and brokers. This applies to both Russian companies and citizens.

In addition, money transfers through electronic means of payment provided by foreign suppliers are prohibited if they are conducted bypassing bank accounts.

Russian markets collapsed on Monday, February 28, at the opening of the trading day. The dollar exchange rate skyrocketed to 140 rubles per one dollar, the euro — to 130 rubles per euro. The same day, the Board of Directors of the Bank of Russia decided to raise the key rate to 20 percent per annum.

Explaining this decision, the head of the Central Bank, Elvira Nabiullina, stressed that the conditions for the Russian economy have changed dramatically, and a wide range of instruments was required to maintain financial stability.

Earlier, the Central Bank of Russia decided to cancel trading on the Moscow Exchange on February 28 "due to the current situation." On the evening of February 28, the Central Bank introduced new restrictions for the Moscow Exchange. Morning and evening sessions will not be held from March 1 to March 5. On Tuesday, March 1, trading in the currency and money markets will open at 10:00 and will last until 19:00. The regulator will assess the expediency to open trading sessions in other markets depending on how the situation develops.