The Central Bank will support the Russian financial market against the background of the weakening of the ruble and falling stock indices.

This was announced on Tuesday, February 22, by the press service of the Central Bank.

“The Bank of Russia keeps the development of the situation in the financial market under control and is ready to take all necessary measures to maintain financial stability,” the regulator said in a statement.

Thus, in order to adapt to increased volatility, the Central Bank will allow banks to report shares and bonds at market value as of February 18 until October 1, 2022.

In addition, until October, credit institutions will be able to use foreign exchange rates as of February 18 to calculate mandatory ratios.

In the near future, the Bank of Russia will continue to monitor the development of the situation on the markets.

At the same time, if necessary, the regulator is ready to take additional measures to support the financial sector, the Central Bank stressed.

The measures announced by the Central Bank are mostly technical in nature, said Natalya Milchakova, deputy head of the Alpari information and analytical center.

As the specialist explained, the initiatives of the Central Bank will allow banks not to recognize the losses incurred due to the fall in stock prices and the ruble exchange rate.

“The current state of affairs on the stock exchange can seriously affect the financial performance of organizations.

The new measures, in turn, make it possible to mitigate this negative factor and not spoil the financial statements of banks,” the specialist added.

In standby

Note that at the auction on Tuesday, the ruble and Russian securities show mixed dynamics after a sharp collapse the day before.

So, at the beginning of the day, the dollar exchange rate grew by 1.5% and for the first time since March 2020 reached 80.97 rubles.

At the same time, the euro rose by 1.4% to 91.45 rubles.

The last time a similar indicator could be observed in April 2021.

However, already in the middle of trading, the dollar and euro rates fell to 78.7 and 89.2 rubles, respectively.

In the morning, the Moscow Exchange Index fell by 6% to 2756 points, and the RTS index fell by 10.9% to 1076 points.

The values ​​are the lowest since November 2020.

Meanwhile, in the afternoon the value returned to the levels of 2937 and 1175 points.

“Market participants continue to react to Russia's recognition of the independence of the DNR and LNR.

Against the backdrop of the decision, investors fear increased sanctions pressure on Moscow.

So far, there is no understanding of the nature of possible restrictions, and it is rather difficult to assess their effect.

Accordingly, the market reacts with sales on a wide range of instruments, ”Maxim Biryukov, senior analyst at Alfa Capital Management Company, explained to RT.

Recall that on February 21, in connection with the aggravation of the situation in eastern Ukraine, the heads of the DPR and LPR Denis Pushilin and Leonid Pasechnik appealed to Russian President Vladimir Putin with a request to recognize the independence of the republics.

The head of state held a meeting with the Security Council, after which he addressed the Russians and announced the adoption of an appropriate decision.

“I consider it necessary to make a long overdue decision to immediately recognize the independence and sovereignty of the Donetsk People’s Republic and the Luhansk People’s Republic.

I ask the Federal Assembly to support this decision, and then ratify the Treaty of Friendship and Mutual Assistance,” Putin said.

The decision to recognize the independence of the republics was followed by an immediate reaction from the West.

For example, the United States accused Russia of "an obvious attack on the sovereignty and territorial integrity of Ukraine" and announced the imposition of sanctions against Moscow on February 22.

Similar initiatives were voiced by the authorities of Great Britain, the European Union and Canada.

“Perhaps the most sensitive sanctions for investors could be restrictions on foreign exchange transactions.

Such measures could put severe pressure on both exporters and banks.

However, in the current situation, we assess the likelihood of such sanctions as low, since this will lead to serious losses for countries that introduce such measures, ”Maxim Biryukov believes.

Note that earlier US President Joe Biden threatened to cut off Russian banks from dollar transactions in the event of Russia's invasion of Ukraine.

According to Natalia Milchakova, Russia's disconnection from the SWIFT payment system also remains unlikely, since such a measure will also hit other participants in international settlements.

The expert also ruled out the possibility of introducing severe restrictions on the Russian energy sector.

“Sanctions may be imposed against Nord Stream 2, but they are likely to be quite mild - at most, certification of the pipeline will be postponed again.

At the same time, no one will impose sanctions against the export of energy resources.

In this scenario, hydrocarbon prices in the EU will reach sky-high heights, and no one needs this,” Natalya Milchakova suggested.

According to her assessment, at the moment the West has no reason for serious restrictions on Moscow.

So, today we are not talking about the invasion of Ukraine.

It is assumed that Russia will provide military assistance to the independent republics, and possible operations will take place as part of the CSTO, the expert stressed.

“There was a similar story when we recognized Abkhazia and South Ossetia.

Then there were no sanctions at all, and after Crimea, the restrictions mainly concerned individuals.

Therefore, there will be nothing fatal for our economy.

The situation in the world right now is completely unsuitable for scattering sanctions.

Most countries have very high inflation, and this problem needs to be addressed.

In addition, the United States is deteriorating relations with China because of Taiwan, so it is unlikely that Washington will fight on two fronts, ”Milchakova added.

Limits of the possible

As Natalya Milchakova believes, fluctuations in the Russian stock and currency markets may continue in the near future.

Nevertheless, in the medium term, the expert does not yet expect the dollar and euro to rise above 84 and 94 rubles.

A certain support for the national currency is still provided by the rapid rise in prices for energy raw materials, Oleg Syrovatkin, a leading analyst at the Otkritie Investments global research department, believes.

At Tuesday's auctions, the cost of Brent oil rose by more than 4% and at the moment exceeded $99.3 per barrel.

The value was the highest since September 2014.

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“Thanks to high world prices for raw materials, Russia has a strong balance of payments and trade.

Exporters have a lot of foreign exchange earnings, and all other metrics indicate that the ruble should cost much more.

The depth of market panic is always difficult to predict, but it is likely that the situation will begin to stabilize, ”said Oleg Syrovatkin in a conversation with RT.

Nevertheless, with the next increase in volatility on the stock exchange, the Central Bank can provide banks with additional liquidity for settlements, as well as give organizations currency in case of its shortage.

Mark Goykhman, chief analyst at TeleTrade Group of Companies, shared this opinion in an interview with RT.

“With a sharp increase in the dollar and euro against the ruble, the regulator and the Ministry of Finance can intervene.

We are talking about large-scale sales of currencies from their reserves.

The Central Bank also has the ability to raise the key rate in order to prevent a sharp devaluation of the ruble, a panic increase in inflation, and the depreciation of government bonds, ”concluded Goykhman.