The Moscow stock exchange has reopened for limited bond trading after being shuttered for three weeks following the start of Russia’s war in Ukraine.
The stock exchange was opened for a limited time on Monday, but only OFZ bonds, the Russian acronym for federal loan obligations, were able to be traded as the Russian central bank slowly attempts to reopen markets.
Yields on benchmark 10-year OFZ ruble treasury bonds shot up to nearly 20% in premarket trading but fell back to about 13% by the close of the trading session, according to the BBC. Higher yields typically signal riskier investments.
Andrei Braginsky, a spokesman for Moscow’s exchange, said he hopes that equities will begin to be traded on the exchange once again. The exchange was shuttered after the MOEX Russia Index plunged as much as 45% in trading the day after Russia began waging war in Europe.
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“Technically, everything is ready, and we are hoping this will resume in the near future,” said Braginsky.
After the invasion, S&P Global Ratings lowered Russia’s credit rating to junk status, and the country’s central bank decided to more than double interest rates to 20%, the highest in nearly two decades.
The Russian central bank said on Friday that it intends to hold its main interest rate at the 20% level while simultaneously purchasing the OFZ bonds as a way of offsetting the massive volatility that has come with the conflict.
The ruble has plunged as a result of Russia’s war and is now worth less than a penny, trading at 107 against the dollar after the stock exchange reopened on Monday.
Russia has been hit with unprecedented sanctions from the United States, Europe, and countries around the world because of the invasion.
In addition to other biting sanctions against individuals and financial entities, Western powers restricted the Russian central bank from accessing a large share of its more than $600 billion in foreign currency reserves, which it would otherwise use to halt the ruble’s decline and limit inflationary pressure.
The U.S. has also hit Russia’s most profitable sector, its energy sector. President Joe Biden announced a ban on oil and gas imports from Russia. Russian imports make up about 8% of total U.S. oil imports, with the country importing about 672,000 barrels per day of oil and refined products from Russia last year.
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Energy prices were rising again on Monday after falling back from just after the invasion. Futures for Brent crude, the global oil benchmark, rose about 6.7% to $115.20 a barrel, while the U.S. benchmark, West Texas Intermediate, grew by 6.5% to $124.90
The higher oil prices have sent gas prices rocketing to record levels in the U.S. The average price for a gallon of gas in the U.S. was about $4.25 on Monday, down from its peak but still much higher than the $2.88 per gallon people were paying this time last year.
