© Reuters. FILE PHOTO: A Russian state flag flies over the Central Bank headquarters in Moscow, Russia March 29, 2021. A sign reads: “Bank of Russia”. REUTERS/Maxim Shemetov/File Photo
(Reuters) – Russia’s central bank announced a slew of measures on Sunday to support domestic markets, as it scrambled to manage the fallout of harsh Western sanctions over the weekend amid Moscow’s invasion of Ukraine.
The central bank said it would resume buying gold on the domestic market, launch a repurchase auction with no limits and ease restrictions on banks’ open foreign currency positions. It also increased the range of securities that can be used as collateral to get loans and ordered market players to reject foreign clients’ bids to sell Russian securities.
The bank did not reply to a Reuters request for comment.
The steps came after Western allies ratcheted up sanctions on Saturday, including blocking certain banks from the SWIFT international payments system and targeting the Russian central bank, committing to imposing restrictive measures that would keep it from deploying its international reserves to undermine sanctions.
The new set of sanctions were likely to deal a devastating blow to the Russian economy and make it hard for Russian banks and companies to access the international financial system. The rouble plunged nearly 30% to an all-time low versus the dollar on Monday.
Russians waited in long queues outside ATMs on Sunday, worried that new Western sanctions over Moscow’s invasion of Ukraine will trigger cash shortages and disrupt payments.
Several European subsidiaries of Sberbank Russia, majority owned by the Russian government, are failing or likely to fail due to the reputational cost of the war in Ukraine, the European Central Bank, the lenders’ supervisor, said on Monday.
The Russia Central bank in several announcements on Sunday sought to ensure financial stability. It said it would resume buying gold on the domestic market from Feb. 28.
The bank also ordered market players to reject attempts by foreign clients to sell Russian securities, according to a central bank document seen by Reuters.
In a bid to inject cash into the financial system, it said there would be no limit at a “fine-tuning” repo auction it plans to hold on Monday and added that the banking system remained stable after a raft of new sanctions targeting Russia’s financial institutions.
The central bank said bank cards were working as normal and that customers’ funds could be accessed at any time. It said it would substantially increase the range of securities that can be used as collateral to get central bank loans.
The bank also said it is temporarily easing restrictions on banks’ open foreign currency positions after the sanctions. The measure, allowing banks suffering from “external circumstances” to keep positions above the official limits, will be in place until July 1, it said in a statement.
The central bank said that it would continue to monitor changes in currency positions “in order to guarantee the normal functioning of the currency and money markets and the financial stability of lending institutions”.
Russian central bank scrambles to contain fallout of sanctions
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