Russia Russia, among other things, defined EU countries as “hostile countries” and allows debts to be paid in rubles – Expert: “Can be seen as debt default”

Russia temporarily allows Russian companies and individuals to pay their debts to certain foreign creditors in rubles, reports AFP news agency. The payment of debts in rubles applies to countries on the new list of “hostile countries”.

The list of hostile countries includes EU member states, the United States, Britain, Australia, Canada, Japan, South Korea, Switzerland and Monaco.

“This can be seen as a default of debts if they are not paid in the original currency,” says Nordea’s chief analyst for interest rate and foreign exchange markets. Jan von Gerich.

According to him, the decision can be interpreted as a counter-sanction to Russia. The decision does not concern the payment of debts to China, for example, which has not imposed sanctions on Russia.

Western countries economic sanctions have plunged the ruble into a sharp downturn. Ruble payments from a Russian bank account to creditors of hostile countries are handled according to the exchange rate of the day set by the Central Bank of Russia. According to the latest quotation from the Russian central bank on Sunday, the euro cost 115.62 rubles.

According to Von Gerich, the exchange rate of the ruble is very difficult to determine. However, the quotation of the Central Bank of Russia is clearly different from market quotations. He estimates that the quotation seems to be lower, as the market’s closing price on Friday was more than 130 rubles per euro. If the ruble exchange rate is unrealistic, it may cut payments in the original currency.

“If I look at Bloomberg on the screen, the ruble is currently going at level 150 [euroa]. The ruble has melted again today [maanantaina] considerably, ”he says.

The European Central Bank has stopped quoting the ruble due to the current situation.

In the past, credit rating agency Moody’s, among others, has estimated that Russia could become insolvent. Moody’s considers it likely that the Central Bank of Russia may impose restrictions on foreign currency transactions, including debt repayments.

Moody’s dropped on Sunday, Russia’s credit rating for the second time during the war in Ukraine, the second-worst junk loan category in its rating system. The rating is now Ca when the previous one was B3.

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