Moscow Exchange says it will stop accepting US dollars as collateral amid Russia's move away from 'toxic' currencies

• The Moscow Exchange is set to stop accepting US dollars as collateral from August 29.
• Russia is diversifying from Western currencies amid sweeping sanctions over its invasion of Ukraine.

On Monday, the Moscow Exchange announced it will stop accepting US dollars as collateral on the foreign exchange and securities market from August 29.

The exchange did not explain the new policy or provide further details, but it had already limited the use of the greenback as collateral to 25% from 50% earlier in August. The Moscow Exchange is the largest exchange in Russia.

Russia has been hit with sweeping international sanctions since it invaded Ukraine on February 24. This means the country can't use nearly half its foreign exchange reserves, which are seen as a crucial tool for countering Western economic sanctions.

Russia has been diversifying from Western currencies such as the US dollar and the euro, which are dominant in global trade. Earlier this month, the central bank said it's looking to add the Chinese yuan, Indian rupee, and Turkish lira to its wealth funds.

This came after the Bank of Russia's proposal for state firms to convert foreign-exchange holdings into those of non-sanctioning countries, Bloomberg reported, citing an August 4 report from the central bank. The move seeks to prod businesses to not use "toxic" currencies, per a Bloomberg translation of the report.

"It makes sense for companies that have savings in the currencies of unfriendly countries to move them into other currencies," said the institution, per the news outlet. Russia published a list of "unfriendly countries" — which includes the US, Australia, UK, and EU countries — in March after international condemnation and sanctions over its war in Ukraine.