Russia has indicated that it may use Chinese ruble or yuan currency reserves to pay interest payments on its debts to avoid ‘default’.
According to Reuters, Finance Minister Anton Siluanov said the move meant Russia had met its stipulations following the freeze of US dollar, euro, pound and yen reserves due to international sanctions on its central bank.
Currently, Russia is blocked from accessing about half of its $ 640 billion foreign exchange reserves, most of which are kept in the country’s major overseas financial centers such as New York, London and Frankfurt.
However, Moscow also holds reserves in yuan and gold, which are still accessible.
Siluanov said Russia will have to pay interest (called coupons) on its Eurobonds on March 16 or Wednesday and has asked Western banks to carry out the transaction.
However, since a large portion of its reserves are frozen, it may face difficulties as the likelihood of such payments will be made depending on restrictions.
Eurobonds are bonds issued in any currency other than the currency of the country or market in which they are issued. The coupon payment on Wednesday is on loans made in U.S. dollars, so it is also expected to be paid in dollars.
Russia intends to pay it in rubles if sanctions prevent banks from paying debts in the derivative currency. However, it is unclear if repayments in yuan or rubles will qualify the loan.
