Russia Uses Domestic Dollar Stash to Avoid Defaulting on Bonds
- U.S. Treasury is allowing the payments to go through
- Russia has been struggling to deal with sweeping sanctions
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Russia appears to be on track to avoid a looming sovereign default after tapping its domestic dollar reserves to make payments on two foreign bonds that had previously been blocked by sanctions.
The U.S. is allowing the funds to be transferred, according to a Treasury official, speaking on condition of anonymity. The fact that Russia is using its domestic reserves has been a key aim of the U.S. restrictions. The idea is to force Russia to drain that pool and undermine its capacity to finance its invasion of Ukraine.