The recent imposition of new US sanctions against Russia has prompted the country’s main financial marketplace, the Moscow Exchange, to cease trading in dollars and euros. The aim of these sanctions is to hinder Russia’s ability to finance its invasion of Ukraine. Consequently, banks are now required to engage in direct bank-to-bank agreements to trade these currencies, leading to increased volatility and higher transaction costs.
Despite initial concerns about a weakening ruble, the impact of these sanctions has not sparked panic among the populace in Moscow. While some banks initially raised their exchange rates significantly, causing fears of a currency crisis, rates quickly stabilized. By June 13, most banks in the city were offering exchange rates with spreads of less than ten rubles, similar to pre-sanction levels.
For many ordinary Russians, the ruble-dollar exchange rate is viewed as a key economic indicator. Consequently, changes to their ability to buy and trade dollars have historically triggered panic and anxiety about economic collapse. However, following two years of strict sanctions and economic isolation, the response this time has been notably muted.
Individuals like Ivan, a software developer, have expressed indifference towards exchange rate fluctuations due to reduced travel opportunities amid the ongoing conflict. Likewise, individuals such as Anton, a retired factory worker, have shifted their savings entirely to rubles in light of past experiences with currency devaluation and impulsive decisions.
Contrary to reports circulating online, observations in Moscow by a reporter from bne IntelliNews have not revealed long lines or widespread panic at banks. The slower reaction on a national holiday when the sanctions were imposed may have contributed to initial confusion. However, bank employees have reported that the situation quickly normalized once the Central Bank set its official rate.
Overall, the response to the new sanctions and their impact on currency trading in Russia appears to be one of caution and pragmatism, with individuals showing resilience and adaptability in the face of economic challenges.
