*

Sanctions end dollar and euro trade on biggest bourse

*

US says it's targeting financing of war economy

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Some banks immediately jack up price of buying dollars

(Adds exporter, trading volumes in paragraphs 8-10, banks

hiking dollar rates in 12-15, detail in 20-25)

By Alexander Marrow and Mark Trevelyan

June 12 (Reuters) - New U.S. sanctions against Russia

have forced an immediate suspension of trading in dollars and

euros on its leading financial marketplace, the Moscow Exchange

.

The exchange and the central bank rushed out statements on

Wednesday - a public holiday in Russia - within an hour of

Washington announcing a new round of sanctions aimed at cutting

the flow of money and goods to sustain Russia's war in Ukraine.

"Due to the introduction of restrictive measures by the

United States against the Moscow Exchange Group, exchange

trading and settlements of deliverable instruments in U.S.

dollars and euros are suspended," the central bank said.

The move means banks, companies and investors will no longer

be able to trade either currency via a central exchange, which

offers advantages in terms of liquidity, clearing and oversight.

Instead, they will have to trade over-the-counter (OTC),

where deals are conducted directly between two parties. The

central bank said it would use OTC data to set official exchange

rates.

Many Russians hold part of their savings in dollars or

euros, mindful of periodic crises in recent decades when the

rouble has crashed in value. The central bank reassured people

that these deposits were secure.

"Companies and individuals can continue to buy and sell U.S.

dollars and euros through Russian banks. All funds in U.S.

dollars and euros in the accounts and deposits of citizens and

companies remain safe," it said.

One person at a large, non-sanctioned Russian commodities

exporter told Reuters: "We don't care, we have yuan. Getting

dollars and euros in Russia is practically impossible."

With Moscow pursuing closer trade and political ties with

Beijing, China's yuan has ousted the dollar to become MOEX's

most traded currency, accounting for 53.6% of all foreign

currency traded in May.

Dollar-rouble trading volume on MOEX tends to be around 1

billion roubles ($11 million) a day, according to LSEG data,

while euro-rouble trading hovers at around 300 million roubles

daily. For yuan-rouble trading, daily volumes now regularly top

8 billion roubles.

WIDE SPREADS

On the eve of the national holiday, the rouble closed at

89.10 to the dollar and at 95.62 against the euro

.

But following the sanctions news, some banks immediately

jacked up their dollar rates.

Norvik Bank said it was offering to buy dollars for just 50

roubles but sell for 200 roubles, though it later adjusted the

rates to 88.20/97.80. Tsifra Bank was buying dollars at 89

roubles and selling at 120.

Other major banks were quoting narrower spreads of 6-7

roubles between their buy and sell rates.

The U.S. Treasury said it was "targeting the architecture of

Russia's financial system, which has been reoriented to

facilitate investment into its defence industry and acquisition

of goods needed to further its aggression against Ukraine".

Russia's central bank has been bracing for such sanctions

for around two years. In July 2022, the bank said it was

modelling various sanctions scenarios with forex market

participants and infrastructure organisations.

"This is bad, but expected news," Russian broker

T-Investments said on Telegram.

Forbes Russia had reported in 2022 that the central bank was

discussing a mechanism for managing the rouble-dollar exchange

rate should exchange trading be halted in the event of sanctions

against MOEX and its National Clearing Centre, which was also

hit by the new sanctions.

NERVY TRADING AHEAD

MOEX said share trading and money market trades settled in

dollars and euros would also cease.

The sanctions will hit the exchange's profits by slashing

trading volumes. In May, total volume on MOEX was 126.7 trillion

roubles ($1.43 trillion), up more than a third on the same month

of the previous year.

In 2023, MOEX recorded net profit of 60.8 billion roubles, a

year-on-year increase of 67.5%.

Yevegeny Kogan, an investment banker and professor at

Russia's Higher School of Economics, urged people against

panicking.

"You know, it's genetic for us - if we're scared, we run to

buy currency. And it doesn't matter whether it's 100, 120 or

150. You mustn't rush," he warned people on Telegram, saying

things could get very serious if people ignored that advice.

"Friends, it looks like tomorrow will be a very nervy day."

($1 = 88.9955 roubles)