Sweeping sanctions and pressure on foreign banks operating in Russia are destabilizing the country’s foreign exchange market, Russia’s central bank said Friday.

In a financial stability review, the Bank of Russia also warned of risks from Russians amassing funds in foreign banks, especially if access to them becomes restricted.

“In the long term, should private investors’ confidence in the Russian stock market decline, there are risks of an increase in citizens’ savings in foreign instruments and the outflow of funds from the Russian banking system, as well as a reduction in companies’ ability to attract long-term financing,” the bank said, according to Reuters.

— Karen Gilchrist

Russia’s war in Ukraine is the key reason for weakness in the German economy, a spokesperson for the economy minister said Friday.

The German economy has entered into recession, new data showed Thursday. Gross domestic product fell by 0.3% in the first quarter of the year, the revised official figures showed.

That follows a decline of 0.5% in the fourth quarter of 2022. A recession is commonly defined as two successive quarters of economic contraction.

However, speaking during a news conference, the spokesperson said the data reflected Germany’s shift away from its reliance on Russia, and that overall consumer development was strong.

— Karen Gilchrist

Japan on Friday announced more sanctions on Russia, including the freezing of assets of 24 individuals and 78 organizations.

The curbs, approved by the government at a Cabinet meeting, target Russian military personnel and pro-Russian individuals in eastern and southern Ukraine, the Foreign Ministry said in a press release.

Tokyo will also ban exports to 80 Russian entities, such as military-related organizations, the ministry added.

The announcement comes after Group of Seven leaders pledged to maintain and strengthen sanctions against Russia at their summit in the western Japanese city of Hiroshima that ended Sunday.

— Karen Gilchrist

Former Russian President and close Putin ally, Dmitry Medvedev, said Friday that the conflict in Ukraine could continue for decades, and added that negotiations with Ukraine could not occur while President Volodymyr Zelenskyy remains in charge.

“This conflict will last for a very long time. For decades, probably. This is a new reality,” Russian Security Council Deputy Chairman Dmitry Medvedev said, according to reports from Russian news agencies cited by Reuters.

Describing the Zelenskyy as “the clown,” Medvedev said negotiations with the current government were impossible.

“Everything always ends in negotiations, and this is inevitable, but as long as these people are in power, the situation for Russia will not change in terms of negotiations.”

Medvedev, who was seen as a liberal modernizer during his presidency from 2008-2012, now casts himself as an anti-Western Kremlin hawk, and his views are seen as closely aligned with those at the top levels of the government.

— Karen Gilchrist

At least one person was killed and 15 wounded after a Russian missile strike on a clinic in the eastern Ukrainian city of Dnipro, President Volodymyr Zelenskyy said Friday.

“Russian terrorists once again confirm their status of fighters against everything humane and honest,” Zelenskyy wrote in a post on the Telegram messaging app.

“A rocket attack on a clinic in the city of Dnipro. As of now, one person was killed and 15 were wounded. The shelling aftermath is being eliminated and the victims are being rescued.”

The post was shared under a video, which showed a building with smoke pouring out of it.

That comes after reports from Ukrainian officials earlier on Friday, who said that air defenses had shot down 10 missiles and more than 20 drones launched by Russia in overnight attacks on the capital Kyiv, Dnipro and eastern regions. CNBC could not independently verify the developments.

— Karen Gilchrist

Russia’s Deputy Security Council Chairman Dmitry Medvedev on Friday said that negotiations with Ukraine are “impossible” as long as the Kyiv administration of Volodomyr Zelenskyy stays in power, in comments reported by Russian state news agency Tass.

“Everything always ends with negotiations, and this is inevitable, but as long as these people are in power, the situation for Russia will not change in terms of negotiations,” he said, according to a Google translation.

Ukraine has, likewise, previously said negotiations were not possible as long as Vladimir Putin stays at the helm of Russian leadership. Zelenskyy nevertheless presented a 10-point peace plan proposal to G20 leaders on Nov. 15.

Global powers — including close Russia trade partner China — have vied for a chance to mediate in the conflict.

The Ukrainian air force said 10 missiles, 23 Iran-made Shahed drones and two reconnaissance drones were shot in an overnight attack by Russia, focused on the eastern parts of the country.

The strike began around 10:00 p.m. local time on May 25 and lasted until 5:00 a.m. on May 26, the Ukrainian air force said on Telegram, adding that several of Moscow’s attack hit targets in the regions of Kharkiv and Dnipropetrovsk.

Serhiy Lysak, Dnipropetrovsk regional governor, said on Telegram that it was a difficult night and that Russia had carried out a mass drone and missile incursion, damaging homes and private companies and starting a fire.

Air alert sirens also blared in Kyiv, according to the Kyiv City State Administration.

CNBC could not independently verify the situation on the ground.

— Ruxandra Iordache

Russia will need to launch a preemptive strike if Ukraine is supplied with Western nuclear weapons, said Dmitry Medvedev, deputy chairman of the Russian Security Council.

“There are some irreversible rules of war. If it comes to [deliveries of] nuclear weapons [to Ukraine], a pre-emptive strike will have to be carried out,” he said, in comments carried by Russian state news agency Tass. He admitted that it was possible that NATO countries will provide Kyiv with warplanes and nuclear arsenal to assist Ukraine in hostilities against Russia.

Western powers have attempted to limit the risk of a nuclear escalation throughout the conflict — whether intentional or through negligent fire around nuclear facility sites, such as Ukraine’s Zaporizhzhia plant.

— Ruxandra Iordache

Belarusian President Alexander Lukashenko signaled that Russia has moved ahead with plans to deploy Russian tactical nuclear weapons on Belarus’ territory, leaving open the possibility that some equipment may have already reached the country.

According to Belarus’ state news agency Belta, Lukashenko said he and his counterpart Vladimir Putin discussed the topic ahead of the Eurasian Economic Forum that took place in Moscow from May 24-25.

“He told me he had signed a decree on our actions concerning the deployment of nuclear weapons in Belarus. I mean a concrete document was discussed. A decision had been made in furtherance of a verbal discussion,” Lukashenko said.

“We had to prepare storage facilities and the rest over there [in Belarus]. We’ve done all of that. This is why the relocation of nuclear munitions began.”

When asked if Russian nuclear warheads were already present in Belarus, he said, “Maybe. I will go and take a look.”

Russia’s intention to station tactical nuclear weapons on Belarusian ground was announced on March 25. Washington has denounced the plan.

— Ruxandra Iordache

Russia’s Foreign Ministry summoned the ambassadors of Germany, Denmark and Sweden to “strongly” protest against what it saw as a “complete lack of results” of their investigations into the causes of explosions that damaged the Nord Stream gas pipelines last September.

The ministry said in a statement that it had summoned the officials due to what Russia saw as their countries’ “inability to ensure transparency investigative actions.”

Germany, Denmark and Sweden launched their own investigations into what happened to the gas pipelines, which span the Baltic Sea from Russia to Germany, but said they were exchanging information. Russia has repeatedly asked for its own experts to be part of the investigations into explosions that severely damaged the pipeline. But Moscow has been rebuffed, a decision it has called “unthinkable.”

Investigators in Europe believe the pipelines were sabotaged but said it is difficult to establish and confirm exactly who carried out the attacks — and whether it was a state-sponsored group or not — and no definitive conclusions have been published yet. Kyiv denied any involvement in the incidents.

On Thursday, the Russian foreign ministry again lambasted “the refusal of the authorities of the Federal Republic of Germany, Denmark and Sweden to cooperate with the Russian side in this case” and accused them of “clearly dragging out time and trying to hide the traces and true perpetrators of the crime, which, as we think, are well-known countries.” 

Russia said it would continue to press the countries’ authorities to “conduct an objective comprehensive investigation of sabotage on the Nord Stream 1 and Nord Stream 2 gas pipelines with the obligatory involvement of Russia.”

— Holly Ellyatt

Ukraine said Russian soldiers are replacing Wagner Group mercenary fighters who have begun to withdraw from Bakhmut in Donetsk in eastern Ukraine.

“In the suburbs of Bakhmut, the enemy replaced Wagner’s units with army regular units. At the moment, the Wagnerites remain in the city of Bakhmut,” Ukraine’s Deputy Defense Minister Hanna Maliar said on Telegram Thursday.

She said Ukraine’s forces still controlled the southwestern outskirts of the town but that Russian forces were trying to stop Ukraine’s advances on its flanks and were “pulling up additional units to the flanks for reinforcement.”

The head of the Wagner Group, Yevgeny Prigozhin, said earlier Thursday that his fighters were already starting to withdraw from Bakhmut, where they’ve been fighting for months. Prigozhin said the withdrawal process would take several days.

“Before June 1, most of the units are rebasing to rear camps, handing over to the military, ammunitions, positions, everything, including dry rations,” he said.

— Holly Ellyatt

The head of Russian private military company, the Wagner Group, said his fighters are beginning to withdraw from Bakhmut in eastern Ukraine.

Yevgeny Prigozhin said that the Wagner Group had fully captured Bakhmut in the heavily contested Donetsk region last weekend, adding that it would hand the town over to the regular Russian army units around May 25.

“PMC ‘Wagner’ began the withdrawal of units from Bakhmut,” a message posted on Wagner Group chief Yevgeny Prigozhin’s Concord Group Telegram channel said.

“We’re withdrawing our units from Bakhmut today, now it’s 5am, 25 May, “Prigozhin said, although NBC was unable to verify if the footage had been filmed in Bakhmut.

“Before June 1, most of the units are rebasing to rear camps, handing over to the military, ammunitions, positions, everything, including dry rations,” Prigozhin added, according to an NBC translation. He said his forces would have a “new objective” after having a rest following prolonged fighting in Bakhmut.

Ukraine has denied it has lost Bakhmut, with defense officials saying their forces still control a southwestern part of the town and have made progress in their bid to take back control of the flanks of the town to the north and south.

— Holly Ellyatt