Washington has now stopped the Russian government from paying holders of its sovereign debt of more than $600m (£457m) from reserves held at US banks, in a move designed to ratchet up pressure on Moscow and eat into its holdings of dollars.
Under sanctions put in place after Russia invaded Ukraine, foreign currency reserves held by the Russian central bank at US financial institutions were frozen.
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But the US had been allowing the Russian government to use those funds to make coupon payments on dollar-denominated sovereign debt on a case-by-case basis.
On Monday though, as the largest of the payments came due, including a $552.4m (£421m) principal payment on a maturing bond, Washington decided to cut off Moscow’s access to the frozen funds.
An $84m (£64m) coupon payment was also due on Monday on a 2042 sovereign dollar bond.
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The move was meant to force Moscow to make the difficult decision of whether it would use dollars that it has access to for payments on its debt or for other purposes, including supporting its war effort, a treasury department spokesperson said.
Russia faces a historic default if it chooses to not do so.
“Russia must choose between draining remaining valuable dollar reserves or new revenue coming in, or default,” the spokesperson said.
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