US Sanctions Intensify Pressure on Russian Financial System

Summary:
Russia’s main exchange has halted trading in dollars and euros following new US sanctions targeting the remaining links between the Russian financial system and foreign banks. The Russian central bank announced that exchange rates for the rouble will now reflect interbank transactions, making the currency’s pricing more opaque and raising costs for importers and exporters. The sanctions also increase the risk for banks in countries still transacting with Russia of losing access to the US financial system. Following the sanctions, the rouble’s value is expected to fall, and spreads between buying and selling prices have widened, increasing transaction costs and volatility. While Russia has shifted towards the Chinese renminbi, issues remain due to Chinese banks’ reluctance to cooperate with Russian entities, posing a risk to the Russian financial system.