Therefore, restrictions on USD settlement can also seriously disrupt these transactions, even if Russia’s trading partners are willing to import. Around 15% of Russia’s exports are settled in ruble around 55% are settled in USD and 30% in other hard currencies. Russia’s central bank has also temporarily banned sales of local securities by foreigners and banned payments of dividends and interest on bonds to foreigners. This led the Russian central bank to hike its key interest rate from 9.5% to 20% and to the imposition of capital controls. Sanctions were also applied to Russia’s central bank which impacts the country’s more than $600 billion of foreign currency reserves, as well as Moscow’s ability to stabilize volatility in the ruble and protect the economy from the wider disruptions of conflict. Some banks were removed from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) financial messaging system, a key piece of banking infrastructure that facilitates payments of all kinds in the economy. Sanctions and export controls have been broad-based to date, targeting Russian banks, exports of high tech, assets, and the issuance of Russian sovereign debt and equity. J.P. Morgan Research projects a high risk of large energy supply disruptions, with Brent oil price to remain elevated between $100-185 bbl given the possibility of more severe sanctions. J.P. Morgan Research views the macroeconomic impact largely through the commodity markets, while the financial linkages between Russia and the rest of the world are comparatively smaller. Russia’s invasion of Ukraine will slow global growth and raise inflation. House of Representatives approving this measure on March 17. The G7 also announced plans to strip Russia of ‘most favored nation’ status, with the U.S. The UK pledged to phase out Russian oil imports by the end of the year while the EU unveiled a new energy security proposal to diversify supply away from Russia, focusing on LNG and pipeline gas supply. President Biden signed an executive order to ban the import of Russian oil, liquefied natural gas (LNG), and coal to the United States and also banned new U.S. The global coordination of sanctions has included the European Union (EU), the U.S., the U.K., Canada, Switzerland, Japan, Australia and Taiwan. The Russian ruble continues to reach all-time lows and the Russian equity market has remained closed since February 25, while oil has surged over the $130 per barrel (bbl) mark for the first time since 2008 and gas prices have spiked to all-time highs. The Russian invasion of Ukraine on February 24 kicked off historic policy actions and moves across global markets.

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