“The Russian economy is undergoing serious blows,” Kremlin spokesman Dmitry Peskov said in a call with foreign journalists. “But there is a certain margin of safety, there is potential, there are some plans, and work is in progress.”
The group said in a statement that its subsidiaries faced “an extraordinary influx of funds and a number of safety concerns with regard to their employees and offices,” adding that they were prevented from being rescued by order of the Russian Central Bank.
The banking sanctions are part of a broader package of measures taken by the West, on an unprecedented scale against an economy of importance to Russia, aimed at cutting off funding for Russian President Vladimir Putin’s war efforts. France estimates that $1 trillion in Russian assets have been frozen, including about half of the Russian government’s war reserves.
Moscow responded with a series of emergency measures aimed at preventing a financial collapse, stopping the flow of cash out of the country, and preserving its foreign exchange reserves. The central bank more than doubled interest rates to 20%, and banned Russian brokers from selling securities held by foreigners.
More capital controls
The Russian stock market was closed on Monday and has not been opened since. The central bank said it will remain closed on Wednesday. The government ordered exporters to exchange 80% of their foreign exchange earnings into rubles, and prohibited Russian residents from making bank transfers outside the country.
The government said on Tuesday that Putin was working on a decree that would prevent foreign companies from exiting their Russian assets, in a bid to prevent an exodus that accelerated this week. State news agencies TASS and RIA reported that Putin also signed a decree banning people from taking more than $10,000 or its equivalent in foreign currency from the country.
The central bank went even further on Wednesday in its attempt to stem the flow of money out of the country. Transfers abroad from accounts with non-resident legal entities and individuals from a number of countries were suspended. This restriction does not apply to Russian citizens.
“Conditions in the Russian financial system and the broader economy are likely to deteriorate in the coming days and weeks because sanctions already announced will take their toll and future sanctions will add to the ongoing negative shock,” Berenberg chief economist Calum Pickering wrote in a research note. Wednesday.
“For the foreseeable future, Russia will remain isolated from the Western world and major global markets.”
Oil companies drive corporate migration
Russia’s energy fortunes have not been directly targeted by Western sanctions, but many of the world’s largest oil companies are withdrawing from the country or halting new investments in projects to explore and develop fields.
Moscow is also finding it more difficult to sell shipments of Russian crude to traders and refiners wary of getting caught up in the web of financial sanctions. Tanker operators also warn of the dangers to ships in the Black Sea.
ExxonMobil said on Tuesday it was abandoning its latest project in the country, Sakhalin-1 – which has been described as “one of the largest international direct investments in Russia”. An Exxon subsidiary was the operator of the project, and the company’s decision to withdraw from its more than 25-year presence in Russia would end.
Apple, the world’s most valuable company, announced on Tuesday that it has stopped selling all of its products in Russia due to the invasion of Ukraine. Apple also said it moved to limit access to digital services, such as Apple Pay, within Russia, and restricted the availability of Russian state media apps outside the country.
Ford said on Tuesday it would immediately suspend its operations in Russia. The The automaker owns a 50% stake in Ford Sollers, a joint venture with Russia’s Sollers.
Boeing suspends support for Russian airlines. A company spokesman said on Tuesday that Boeing was temporarily halting “spare parts, maintenance and technical support services for Russian airlines,” as well as “suspending major operations in Moscow and temporarily closing our office in Kyiv.”
Airbus also said it would suspend support services and the supply of spare parts to Russian airlines.
Charles Riley, Nathan Hodge, Chris Liakos, Vanessa Yurkevich, Matt Egan, and Angus Watson contributed to this report.
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