Default in Russia and its consequences for the ruble exchange rate and the stock market
One of the most authoritative news agencies , Bloomberg , reported that on June 27, 2022, a default occurred in the Russian Federation.
That is, Russia was unable to repay debt obligations to holders of government bonds in the amount of 100 million US dollars.
The money was supposed to be transferred before 24:00 on June 26, 2022, but due to the blocking of Russian accounts, it was technically impossible to complete the obligatory payment.
Therefore, we can say that the default is purely technical, since there is money, but there is simply no way to transfer it to the creditor.
It is clear that this will not happen immediately, and a decision by an international court will be required to legalize the process, but this event could transform a technical default into a real one.
Consequences of default in Russia
How will this event affect the ruble exchange rate against other currencies and the price of Russian securities?
It can definitely be said that it is negative.
The Russian government will need to make significant efforts to maintain the non-cash exchange rate of the national currency at a low level. It's highly likely that the official ruble exchange rate will fall below 60 rubles per dollar this week.
The stock market will also react as predicted after trading begins on June 27, with most securities forming a downward trend that will continue until the situation stabilizes.
In addition to these direct consequences, a default in Russia will have a negative impact on the country's economy, lowering its credit rating and reducing investor confidence.
Overall, there's no hope for anything good; the situation may not improve until autumn 2022, the period during which most analysts predict a easing of the conflict in Ukraine and the signing of a peace agreement.
