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The Moscow Exchange equity market will remain shut until at least March 18, Russia's central bank said on Saturday as it seeks to shield domestic investors from the impact of international sanctions imposed over the country’s military offensive against Ukraine.
The central bank said a decision on whether trading would resume from March 21 will be announced later.
“The Bank of Russia has decided not to resume trading in the period from March 14 to March 18, 2022 on the Moscow Exchange in the stock market section, with the exemption of the 'Redemption: targeted orders' mode with settlements in roubles, as well as in the SPFI market section,” the regulator said on Saturday.
It said trading on the foreign exchange market, money market and repo market would open at 0700 GMT on those days.
Stock trading on Moscow's benchmark MOEX Index has been halted since February 25.
Russia’s economy has taken a massive hit after the US and its allies took punitive actions against Moscow following its military offensive in Ukraine. Russian companies and oligarchs in President Vladimir Putin's inner circle are also facing sanctions and their assets have been frozen by Western countries.
Many Western companies have exited or temporarily suspended operations in Russia. Moscow is now considering nationalising the assets of foreign companies that have severed business ties.
The US and UK have banned the import of Russian crude while Europe, which imports more than 40 per cent of its natural gas and 30 per cent of its oil from Russia, has pledged to reduce its reliance on Moscow for its energy needs.
On Thursday, the Institute of International Finance (IIF) estimated that Russia's economy will shrink 15 per cent this year as it slides into a deep recession that will be twice as severe as the 2009 recession.
The working hours of the Moscow Exchange for the week from March 21 to March 25, 2022 will be announced later on the official website of the Bank of Russia.
There were 455 organisations operating in the Russian securities market at the end of the third quarter of 2021, of which 193 were credit institutions, 238 were non-bank financial institutions and 24 were investment advisers, according to the regulator’s website.
Local traders are bracing for a sell-off as investors react to a slew of fresh measures over the past two weeks, including import bans on Russian oil by the US and UK.
The rouble slumped on Wednesday when foreign exchange trading resumed after being shuttered since March 5.
Although Russia has promised to prop up its equity market with up to $10 billion when it reopens, strategists expect local stocks could sink as much as 50 per cent as international sanctions hit everything from Russia’s ability to access foreign reserves to the Swift bank-messaging system.
Moody's Investors Service downgraded Russia's ratings deeper into “junk”, or non-investment grade territory on March 6, for the second time in two weeks and expects the country's economy to shrink 7 per cent this year due to mounting pressure on its finances.
Moody's said its decision was prompted by the Central Bank of Russia's capital control measures put in place following sanctions imposed by the US, Europe and other countries. Moscow's capital control measures are likely to restrict cross border payments including debt service on government bonds, the rating agency said.
Sanctions against Russia's central bank will “severely restrict” its access to international reserves to support its currency and financial system, the International Monetary Fund said on March 5.
International sanctions on Russia’s banking system and the exclusion of a number of banks from global payments system Swift have “significantly disrupted” the country’s ability to receive payments for exports, pay for imports and make cross-border financial transactions, the Washington-based lender said.
With inputs from Bloomberg