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The Russian foreign exchange market has done a one-eighty, faced with an unprecedented near-absence of foreign investors. This indicator was similar only in the mid-1990s, according to Mikhail Zadornov, Russia’s former Minister of Finance. He expands on this statement in a column for RBC:
“Last year's events caused drastic changes in the [Russian] forex market. Firstly, its currency composition has changed: before 2022, the currency trading volume at the Moscow Exchange was two or three times as big as today. Secondly, the dollar and the euro accounted for 80-90% of transactions. At the moment, the dollar accounts for one-third of the transactions, the euro for 10%, the yuan for another one-third, and the rest is distributed across miscellaneous currencies. Abandoning dollars and euros for settlements and a drop in the share of hard currencies contribute to the ruble's weakening.”
Zadornov also points out a decline in overall liquidity, caused by a lack of instruments to offset market fluctuations. The presence of foreign investors would have helped:
“Judging by the number of non-resident players, the market is back to its mid-1990s level. Foreigners have also been present in the Russian currency market (for one, they quickly returned after the 1998 crisis). I can't recall a situation when we had no foreigners at all, be it banks or institutional investors.”