February 3, 2023

Ruble hits 2-year high against the dollar as Russia tries to avoid default

2 min read

Russia’s currency hit a two-year high against the US dollar on Friday. The ruble gained ground when the country said it had succeeded in repaying creditors in dollars, as Russia had tried. Avoid defaults.

The country’s finance ministry said in a statement that it had created a 56 565 million Eurobond due this year, as well as a 84 84 million Eurobond that was due to mature in 2024. Both payments were made in US dollars, the finance ministry claimed, as required by the terms of the bond agreement.

Russia’s finance ministry said in a statement that the payment was made “in the currency of the relevant Eurobonds – in US dollars”. “Thus, the service obligations of the sovereign Eurobonds are being carried out in accordance with the conditions laid down in the released documents.”

On April 6, Russia said it had paid off the bonds in rubles, prompting the S&P to announce three days later that Russia was predetermined. On its foreign debt obligations. Although dollar payments are already due, late payments in Russian dollars serve as a last ditch effort to avoid default.
Russian gas consumers in Europe can accept Putin's payment terms.

Bond payments usually come with a grace period of 30 days. For these bond payments, the grace period expires on May 4, so S&P may change its mind. S&P could not immediately be reached for comment on whether it would withdraw its announcement that Russia had defaulted on its loan.

Russia has money to pay off its debts. It will not be able to access about half of those funds, which amount to about 5 315 billion, after the West imposed extraordinary restrictions on its foreign reserves.

But Russia has apparently found a way to repay hundreds of millions of dollars in debt without access to its frozen reserves. According to Reuters, a US Treasury official said the payment was made from a new pile of money because it had not lifted restrictions on Russian-approved dollars.

The news pushed the Russian ruble, which had been rising for more than two months, to a two-year high against the US dollar. One dollar can buy about 68 rubles on Friday, less than half of what was bought in early March. At its peak on March 7 The ruble was trading at 135. To the dollar.
Russia has been able to do that. Support the ruble. Rising interest rates despite global sanctions, barring Russian brokers from selling securities held by foreigners and Demand for payment in rubles for gas and oil deliveryAmong other deeds. These measures have allowed Moscow to artificially meet demand for the ruble, even as the country’s economy continues to falter.

Since then, the country has managed to return to its dramatic rate hikes, including another dramatic rate cut on Friday.

– CNN’s Claire Sebastian contributed to this report.

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