On Wednesday, Russia’s Finance Ministry announced that it had settled in rubles a US$649.2 million debt issued on April 4 following a refusal of a foreign bank to make the payment in dollars due to the U.S. sanctions.
Europe Targets Russian Coal & Ships in New Sanctions
Due to White House sanctions, the Russian Central Bank's foreign exchange reserves, which are held in US financial institutions, remain frozen since Feb. 24.
After that date, the U.S. Treasury Department had allowed Russia to use those funds to make coupon payments on dollar-denominated sovereign debt on a case-by-case basis.
However, on Monday, the Biden administration cut off all Moscow access to its frozen funds, as Russia managed to pay off $552.4 million of bond debt.
Although numerous analysts claim that Russia will not be able to meet its payment obligations, the Kremlin spokesperson Dmitri Peskov argued that there is no basis for these allegations since his country has all the resources necessary to avoid a default.
Besides disconnecting Russian banks from the SWIFT interbank payment system, other European and U.S. sanctions aim to leave Moscow without income from energy exports.
The European Commission (EC) President Ursula von der Leyen urged the European countries to reject Kremlin's proposal to pay for Russian gas purchases in rubles to avoid. Not all European countries, however, seem willing to comply with her suggestion.