The Ruble gains traction against the dollar as the country confirmed that it will not default on its creditors.
On Friday, Russia’s ruble surpassed a two-year high versus the US dollar. The currency strengthened after Russia announced that it had been able to repay creditors in dollars, avoiding a default.
In a statement, the country’s finance ministry said it had issued a $565 million Eurobond due this year, as well as an $84 million Eurobond due in 2024. According to the finance ministry, both payments were made in US dollars, as required by the bond’s contract terms.
“The payments were made in the currency of issue of the corresponding Eurobonds — in US dollars,” Russia’s finance ministry said in a statement. “In this way, the obligations of servicing sovereign Eurobonds are being carried out in observance of the conditions laid out in the issue documentation.”
Russia announced on April 6 that it had made the payments on those bonds in rubles, prompting S&P to declare Russia in default on its foreign debt obligations three days later. Despite the fact that the dollar payments are already past due, Russia’s late dollar payment is a last-ditch effort to avert default.
Russia has sufficient funds to repay its debts. It can only access nearly half of those cash after the West imposed unprecedented restrictions on its $315 billion in foreign reserves.
Russia, on the other hand, appears to have figured out a method to pay off hundreds of millions of dollars in debt without having to tap into its frozen reserves. According to Reuters, a US Treasury official said the payment must have come from a new pile of money because the sanctions on Russia’s sanctioned currency were not lifted.