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News Ticker

A ‘default’ when flush with cash: 5 signs Russia ain’t sinking yet

By Guy Faulconbridge | 27 June 2022

KITCO (REUTERS) — Russia may have defaulted for the first time on foreign bonds since the Bolsheviks refused to pay on a vast debt pile after the 1917 Revolution, but its $1.8 trillion economy is showing no sign of sinking just yet.

The sanctions imposed by the West over Russia’s invasion of Ukraine delivered the biggest external shock to Russia’s economy since the 1991 fall of the Soviet Union, but the economy has – so far – been remarkably resilient.

Russia’s 2022 “default”, announced by the United States on Monday but rejected by the Kremlin, is very different to debt crises of previous years: in 1918 the Bolsheviks didn’t want to pay and in 1998 Russia could not pay its domestic debts.

This time, Moscow can pay and says it is ready to but the West is preventing it.

Following are five signs that the Russian economy is still resilient:

The rouble has been driven higher by proceeds from commodity exports, a drop in imports and capital controls which have shielded the currency from a broader sell off.

The rouble hit a 7-year high against the dollar and euro on June 22. […]

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