The US Treasury announced that the United States has finally decided to end the exemption policy that allows Russia to pay its debts in US dollars from 00:01 Washington time on the 25th, and will not allow US banks to assist the Russian government in repaying its debts. The decision could plunge Russia into default on its debt.

Since the conflict between Russia and Ukraine, the United States has imposed a number of financial sanctions against Russia, but still allows Russia to repay international debt through American banks. The "window" closed in the early morning of the 25th. Us Treasury Secretary Yellen has recently said that the "window" is to allow regular transactions to last "for a period of time", but the "window" will not always exist.

Boston Loomis Sayles & Co. Hassan Malik, a senior sovereign analyst, said the expiration of the exemption "will certainly increase the likelihood of Russia defaulting, which is already high".

Russia is scheduled to repay about $100 million in foreign debt on Friday. As the expiration of the exemption is to be expected, Russia last week began to transfer money to meet its obligations ahead of new restrictions. Russia has said that its debt repayment obligations have been fulfilled due to the flow of funds to payment agents.

But although the US decision adds another obstacle to the payment of interest to foreign investorsBut it is not clear whether this will be enough to cause Russia to default.

First, bondholders outside the US may still have access to funds. ITI Capital, one of Moscow's largest brokerages, says that since most holders of Russian bonds are in Europe, there are not enough creditors to declare default; the default standard is usually 25 per cent of outstanding bonds.

Zhitong Finance learned that Dennis Hranitzky, head of the sovereign litigation business of Quinn Emanuel Law firm, said shortly before the US Treasury confirmed the news.Letting the window expire is a "very bad policy decision" that will affect US investors "for no reason".

"I understand that the reason for this is that default will increase pressure on Russia," he said. But is the extra pain of default more obvious than the pain caused by existing sanctions? Russia already has no access to western capital markets. "

Second, if any debt cannot be repaid, Russia will have a grace period of up to 30 days to find a solution, as it did in early May, when Russia provided money to investors at the last minute after initial payments were blocked.

Russia will have to pay a total of about $1 billion in par interest for the rest of 2022, but it has plenty of cash due to weekly oil, gas and other commodity sales.

After May 25, not all Americans are banned from making payments. According to a license issued by the U.S. Treasury Department on April 7, U.S. investors must withdraw from Russian financial institution Alfa-Bank AO by June 30 and diamond company Alrosa PJSC by July 1.

The rouble, which is already at a four-year high, has barely fluctuated by the Treasury's announcement.The rouble is the world's best-performing currency this year, rising about 30 per cent against the dollar.