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New US sanctions 'generated a significant mess,' economist says

STORY: :: The new U.S. sanctions on Russia’s financial system

‘generated a significant mess,’ an economist says

:: Moscow, Russia

:: June 13, 2024

:: Yevgeny Nadorshin, Chief Economist, PF Capital

"I believe that by exactly this moment, it was a pretty unexpected event. And as we can see, that generated a significant mess on the local market." // "They were expected a year and a half ago, and there were preparations made. But it looks like that by this moment, most of the agents decided that it couldn't happen, because there were a couple of times specifically last year when sanctions against the Moscow Stock Exchange were expected to be introduced and they didn't introduce it." // "That sanction itself, it looks to me, targeted more to closing the Russian financial market and to limiting the capacity of residents to get outside Russian economic space, but not to make the ruble significantly cheaper. So it's just because it affects payments, payments for exports, payments for imports and other external communications, this may affect the exchange rate too. But it doesn't look targeted at the ruble depreciation directly.”

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Washington imposed new sanctions on Wednesday on the Moscow Exchange MOEX.MM and its clearing agent, the National Clearing Centre (NCC), leading to an immediate trading halt in dollars and euros on Russia's largest bourse.

The U.S. Treasury said it was "targeting the architecture of Russia's financial system, which has been reoriented to facilitate investment into its defense industry and acquisition of goods needed to further its aggression against Ukraine."

Russia shrugged off the move, pointing to the reduced role of the dollar and euro since Moscow's February 2022 full-scale invasion of Ukraine led to sweeping Western sanctions.