«There's definitely no need to panic»
The sanctions events of June 12 have generated a host of alarmist responses of varying degrees of gloom. Discussing the consequences of American measures against the Moscow Exchange and the National Clearing Center, a number of experts predict complete non-convertibility of the ruble and multiple rates: one for bank exchange offices, another for international trade transactions, and a third for the gray and black currency markets. Could the concept of «currency exchange» that is familiar to Russians lose its original meaning?
The main target of the blocking sanctions imposed by the US Treasury (more precisely, its foreign investment control unit — OFAC) is the mechanism for the free formation of dollar and euro exchange rates against the ruble. As the authors explain, the measures are aimed against the “architecture of the Russian financial system,” reoriented towards promoting investment in the defense industry.
The Bank of Russia, in turn, has already explained that transactions with dollars and euros will be made on the over-the-counter market . To determine rates, the regulator will use bank records and information from digital over-the-counter trading platforms.
The United States created additional inconvenience for us by acting in its usual logic. The point of their decision is to make export-import operations extremely difficult for Russian companies by cutting off access to foreign currency, says Nikita Maslennikov, a leading expert at the Center for Political Technologies. Businesses still need dollars, and the easiest way is to buy them at organized auctions. Now this opportunity is disappearing: what remains is the over-the-counter market, where the costs of such operations are obviously higher.
“It is obvious that the exchange rate in Russia remains uniform and market, but from now on it will be formed on the over-the-counter platform, which is located at the Moscow Exchange,” says MK’s interlocutor. — For the monetary authorities, for the Central Bank and the Ministry of Finance, this whole situation is absolutely not critical from the point of view of decision-making. They worked on the corresponding protective mechanism in the fall of 2022, and a month and a half to two months before the current events they announced their readiness to launch it. There are two components here: firstly, the current exchange rate of the yuan to the ruble, and secondly, the quotes established by the People's Bank of China in relation to the yuan-dollar pair.
— At the start of trading, the yuan strengthened, exceeding 12 per dollar, and then began to gradually go down. In addition, in the morning, banks increased the spread (difference) between the sale and purchase rates of the currency, the purchase price now varies in the range of 90-97… We cannot avoid market volatility for some time. It is not yet clear what the demand and supply of currency in the over-the-counter market will ultimately be. In general, during the period of adaptation to the new trading reality, the ruble exchange rate may weaken by up to 10%. This follows from the historical experience associated with sanctions against the Russian financial sector. It is also important that at the end of the first quarter, the share of currencies of unfriendly countries in the Russian Federation’s payments for exports fell to 17.8%, and the share of the ruble in foreign trade payments reached 44.7%. These are records for the entire history of statistics.
— Sanctions may well accelerate the creation of a new settlement system within the BRICS Bridge — multilateral currency clearing, which is built on the basis of the turnover of digital financial associations. So far, everything is at the level of expert developments and meetings held between the ministers of finance and heads of central banks of the countries of the association. There are no visible results, but it is possible that a test regime will be established by the end of the year. As for the threats, they are increasing, first of all, for large Chinese banks, which, after Moscow Exchange entered the American SDN list, risk incurring secondary sanctions. For Russian business and foreign trade, this means an increase in costs and transaction fees: if previously there was one operation, today you have to perform at least three or four. The Americans understand this very well and are systematically hitting one point: settlements in Russia’s trade with friendly countries will become more expensive and take longer.
— Panic, twitching, running somewhere, what -It’s definitely not worth changing. Nothing will change globally for these categories of consumers. Human psychology is influenced primarily by profitability, which in foreign currency accounts was and remains scanty. And regarding alarmist comments related to sanctions, I note: the bulk of them appeared on the evening of June 12, when there was neither a clear understanding of the situation nor explanations from the financial authorities. Soon the Central Bank made it clear: it would not allow any multiplicity of exchange rates; the ruble exchange rate remained, firstly, the market one, and secondly, the same one. I think this idea will quickly reach most hotheads.