Moscow Exchange Allows Access To Trade In Bond Market, Restricts 'Unfriendly Countries'

The group of 'unfriendly' countries include nations from EU members to Canada and Japan, which are accounted for around 90 per cent of total portfolio investments into Russia as of last year

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New Delhi: In a bid to mobilise capital while keeping jurisdictions it considers friendly, Russia will allow trading in debt securities for investors from those countries which haven’t joined the sanctions imposed by the US and its allies. The Moscow exchange allowed trading in debt securities from Monday for investors ending a hiatus since Russia sealed off its markets to restrict the flow of money out of the country when the war began in late February.

It is part of the plan emerging from the central bank proposals and a gradual unwinding of local restrictions.  The trade won’t be extended to clients from “unfriendly” countries, who remain subject to capital controls banning foreigners from selling or collecting payments on local securities, reported news agency Bloomberg.

The group includes nations from European Union members to Canada and Japan. The countries accounted for around 90 per cent of total portfolio investments into Russia as of last year.

This is the latest example of Russia resorting to extreme measure in sorting friend from foe.

President Vladimir Putin has recently banned some foreign banks and energy companies from exiting their businesses in the country. While another order allowed Russian lenders with frozen foreign exchange to stop operations with corporate clients in those currencies. Interestingly, Russia’s sovereign wealth fund may now invest in the currencies of nations like China, India and Turkey, after penalties blocked euro and dollar purchases.

“Given the circumstances, it will be necessary to develop trade and financial relations with those countries that are ready to do this with Russia,” said Oleg Vyugin, a former top Russian central bank and Finance Ministry official. Finance had become the target point for Russia soon after Putin ordered his military into Ukraine on February 24.

Initiating action against Kremlin, foreign governments imposed sanctions on trade and finance, froze about half the reserves of its central bank and cut many of its banks from the SWIFT global messaging system.