Russia imposes a 'corralito' on foreign currency accounts and Fitch warns of "imminent" default

• Direct War in Ukraine, latest news

Russia

has suspended foreign currency sales for six months, the

(BC) announced, as the country faces an arsenal of

Western

.

"Banks will not be able to sell foreign currency to citizens"

, the Russian CB said in a statement, adding that citizens will be able to exchange their currency for rubles during that period.

Holders of foreign currency accounts in Russian banks

.

If they want to withdraw more money, they will have to do it in rubles, at the official rate of the day, in accordance with the new provisions.

The delivery of the required amount of dollars will also not be immediate, since "the path of the requested sum to a specific bank branch may take several days," the BC warned.

The ruble hit its all-time low against the dollar on Monday.

The Russian economy is hit by the sanctions imposed after the invasion of

on February 24, directed primarily against the

and the main Russian banks.

For its part, the credit rating agency

has once again lowered the solvency note as a long-term issuer of Russia's sovereign debt, which now stands at 'C' from 'B', as a reflection of the

.

In its analysis, the risk rating agency has justified the rating downgrade as a consequence in part of the decree approved in

on March 5, which could potentially force the redenomination of sovereign debt payments in foreign currency to local currency for creditors in specific countries. .

In addition,

notes that, since the end of last week, the application of the regulation of

has restricted the transfer of Russian debt coupons in local currency to non-residents.

More broadly, the agency warns that increased sanctions and proposals to limit

's energy trade increase the likelihood of a political response by the

that includes at least a selective default on its sovereign debt obligations. .

Last week, S&P Global Ratings downgraded the solvency rating in both local and foreign currency of

's sovereign debt to 'CCC-' from 'BB+' given the growing risk of default as a result of the sanctions imposed on the country after the invasion from Ukraine.

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