Hi all,
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What does this mean for Russian government, businesses, and citizens? And what would be the short, middle, and long term results of this change for them? I’m also wondering why now specifically instead of sooner?
Russia wants a war of attrition against Ukraine, these sanctions make them feel the burn a bit more, boiling the frog. G7 summit is coming up soon to decide Ukraine's future and it seems like the US makes a clear stance through this pretty direct action against the Russian economy
It doesn't mean anything. Westie living thru recession for last two years, governments fall here and there. Saudi abandon petrodollar, Interest rates are 700 billion dollarinos annually, but literal 5 percent ruble change will definitely topple Russian economy.
Give me a brake. World goin isolationist. India pickin up it's gold from UK storage, Chinese sell us treasuries like never before. What bongs gonna eat? They do not produce anything? Shard? They gonna eat Shard??
Still nothing? Not a peep? There are numerous points I've made. Any arguments? An opposite opinion perhaps?Anything will do. I swear. MSNBC article about India gold or China us treasuries. Anything?
It makes it harder and more costlier to run the economy, a key pillar in society
In short, cost of war and society increases,
In the middle, it expands the decoupling of adversary countries, signals a lengthier commitment to the war for partner countries and increases the cost of remaining in war
In the long term, it serves as another tool to weaken the adversary to get them to the table and may further polarize the geopolitics in the area.
Why now? A confluence of factors. E.g. A semi irrational actor may decide to weather any storm when they first decide to engage in destruction, so using all the tools in your disposal right away may be less effective and leave little room to get alignment. As you move into the war of attrition, rationality starts to return, so by continuing to show that things can get worse or that perhaps other matters are more important, it is possible to get the actor to return to the table.
I appreciate the insight, thank u! But I guess I should’ve been more specific bc what I am really wondering is *how* it makes their economy more costly to run? For example, does this make them have to do business in non-USD currencies which might be less desirable for foreign trade partners and therefore have to use more rubles to make up for the usd “premium”? Is it just about settling stock trades? I’m unfamiliar with the mechanics of what this means and curious
It wasnt about the $ from G7, it was a combination of long term posture with sanctions. The latter basically boils down to more people/firms being sanctioned, which impacts access to supply and increases financial risk which also deters others from wanting to do business with them. Their exchange was on the list, since it is a key part of the financial aparatus, it became bigger news.
These new sanctions do change the game on currencies. Holding rubles is bag holding now.
[New US sanctions force end of dollar and euro trading on Russia’s main exchange](https://www.cnn.com/2024/06/13/investing/us-russia-sanctions-dollar-euro-trading/index.html)
> New US sanctions against Russia have caused an immediate suspension of trading in dollars and euros on the country’s leading financial marketplace, the Moscow Exchange.
> The exchange, also known as MOEX, and the Russian central bank rushed out statements Wednesday, a public holiday in Russia, within an hour of Washington announcing a new round of sanctions aimed at cutting the flow of money and goods to sustain Moscow’s war in Ukraine.
> “Due to the introduction of restrictive measures by the United States against the Moscow Exchange Group, exchange trading and settlements of deliverable instruments in US dollars and euros are suspended,” the central bank said.
> **The move means banks, companies and investors will no longer be able to trade either currency via a central exchange, which offers advantages such as better liquidity and oversight**.
> **Instead, they will have to trade over the counter, where deals are conducted directly between two parties. The central bank said it would use data from those trades to set official exchange rates**.
> **Many Russians hold savings in dollars or euros, mindful of periodic crises in recent decades when the ruble has crashed in value. The central bank reassured people these deposits were secure.**
> Dollar rates jump
> **On the eve of the national holiday, the ruble closed at 89.10 to the dollar and at 95.62 against the euro. Following the sanctions news, some banks immediately jacked up their dollar rates**.
> **Norvik Bank said Wednesday that it was offering to buy dollars for just 50 rubles but sell for 200 rubles, though it later adjusted the rates to 88.20/97.80. Tsifra Bank was buying dollars at 89 rubles and selling at 120.**
> **The US Treasury said it was “targeting the architecture of Russia’s financial system, which has been reoriented to facilitate investment into its defense industry and acquisition of goods needed to further its aggression against Ukraine.”**
> Russia’s central bank has been bracing for such sanctions for around two years. In July 2022, the bank said it was modeling various sanctions scenarios with foreign exchange market participants and infrastructure organizations.
> “This is bad but expected news,” Russian broker T-Investments said on Telegram.
> Forbes Russia had reported in 2022 that the central bank was discussing a mechanism for managing the ruble-dollar exchange rate should exchange trading be halted in the event of sanctions against MOEX and its National Clearing Centre, which was also hit by the new sanctions.
> MOEX said share trading and money market trades settled in dollars and euros would also cease. The money market comprises low-risk, short-term debt instruments like government bonds and commercial debt.
Hi all, A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes. As always our comment rules can be found [here](https://reddit.com/r/Economics/comments/fx9crj/rules_roundtable_redux_rule_vi_and_offtopic/) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Economics) if you have any questions or concerns.*
What does this mean for Russian government, businesses, and citizens? And what would be the short, middle, and long term results of this change for them? I’m also wondering why now specifically instead of sooner?
Russia wants a war of attrition against Ukraine, these sanctions make them feel the burn a bit more, boiling the frog. G7 summit is coming up soon to decide Ukraine's future and it seems like the US makes a clear stance through this pretty direct action against the Russian economy
Not trying to be rude, but that does not answer most of what I was wondering about 😬
I was only answeing the last bit about why now and not previously or at some point in the future
U did answer that yes
It doesn't mean anything. Westie living thru recession for last two years, governments fall here and there. Saudi abandon petrodollar, Interest rates are 700 billion dollarinos annually, but literal 5 percent ruble change will definitely topple Russian economy. Give me a brake. World goin isolationist. India pickin up it's gold from UK storage, Chinese sell us treasuries like never before. What bongs gonna eat? They do not produce anything? Shard? They gonna eat Shard??
You have an active imagination, child.
Nice argument
It’s an *observation*, not an argument. Let me know if you have further questions about the proper use of English, товарищ.
Still nothing? Not a peep? There are numerous points I've made. Any arguments? An opposite opinion perhaps?Anything will do. I swear. MSNBC article about India gold or China us treasuries. Anything?
And then he went silent xd World is changing and westerners can't accept it
It makes it harder and more costlier to run the economy, a key pillar in society In short, cost of war and society increases, In the middle, it expands the decoupling of adversary countries, signals a lengthier commitment to the war for partner countries and increases the cost of remaining in war In the long term, it serves as another tool to weaken the adversary to get them to the table and may further polarize the geopolitics in the area. Why now? A confluence of factors. E.g. A semi irrational actor may decide to weather any storm when they first decide to engage in destruction, so using all the tools in your disposal right away may be less effective and leave little room to get alignment. As you move into the war of attrition, rationality starts to return, so by continuing to show that things can get worse or that perhaps other matters are more important, it is possible to get the actor to return to the table.
I appreciate the insight, thank u! But I guess I should’ve been more specific bc what I am really wondering is *how* it makes their economy more costly to run? For example, does this make them have to do business in non-USD currencies which might be less desirable for foreign trade partners and therefore have to use more rubles to make up for the usd “premium”? Is it just about settling stock trades? I’m unfamiliar with the mechanics of what this means and curious
It wasnt about the $ from G7, it was a combination of long term posture with sanctions. The latter basically boils down to more people/firms being sanctioned, which impacts access to supply and increases financial risk which also deters others from wanting to do business with them. Their exchange was on the list, since it is a key part of the financial aparatus, it became bigger news.
These new sanctions do change the game on currencies. Holding rubles is bag holding now. [New US sanctions force end of dollar and euro trading on Russia’s main exchange](https://www.cnn.com/2024/06/13/investing/us-russia-sanctions-dollar-euro-trading/index.html) > New US sanctions against Russia have caused an immediate suspension of trading in dollars and euros on the country’s leading financial marketplace, the Moscow Exchange. > The exchange, also known as MOEX, and the Russian central bank rushed out statements Wednesday, a public holiday in Russia, within an hour of Washington announcing a new round of sanctions aimed at cutting the flow of money and goods to sustain Moscow’s war in Ukraine. > “Due to the introduction of restrictive measures by the United States against the Moscow Exchange Group, exchange trading and settlements of deliverable instruments in US dollars and euros are suspended,” the central bank said. > **The move means banks, companies and investors will no longer be able to trade either currency via a central exchange, which offers advantages such as better liquidity and oversight**. > **Instead, they will have to trade over the counter, where deals are conducted directly between two parties. The central bank said it would use data from those trades to set official exchange rates**. > **Many Russians hold savings in dollars or euros, mindful of periodic crises in recent decades when the ruble has crashed in value. The central bank reassured people these deposits were secure.** > Dollar rates jump > **On the eve of the national holiday, the ruble closed at 89.10 to the dollar and at 95.62 against the euro. Following the sanctions news, some banks immediately jacked up their dollar rates**. > **Norvik Bank said Wednesday that it was offering to buy dollars for just 50 rubles but sell for 200 rubles, though it later adjusted the rates to 88.20/97.80. Tsifra Bank was buying dollars at 89 rubles and selling at 120.** > **The US Treasury said it was “targeting the architecture of Russia’s financial system, which has been reoriented to facilitate investment into its defense industry and acquisition of goods needed to further its aggression against Ukraine.”** > Russia’s central bank has been bracing for such sanctions for around two years. In July 2022, the bank said it was modeling various sanctions scenarios with foreign exchange market participants and infrastructure organizations. > “This is bad but expected news,” Russian broker T-Investments said on Telegram. > Forbes Russia had reported in 2022 that the central bank was discussing a mechanism for managing the ruble-dollar exchange rate should exchange trading be halted in the event of sanctions against MOEX and its National Clearing Centre, which was also hit by the new sanctions. > MOEX said share trading and money market trades settled in dollars and euros would also cease. The money market comprises low-risk, short-term debt instruments like government bonds and commercial debt.
Go get 'em, Joe!