Russian Government to Repay Debts in Ruble
The Russian government has announced that Russian enterprises and itself would repay their debts in ruble in relation to certain states. In the morning of March 8, the USD-RUB exchange rate was approximately 150 rubles per U.S. dollar, whereas it was 70 to 80 before the Russian invasion of Ukraine.
Under the circumstances, a lot of South Korean enterprises are facing the risk of pecuniary loss. The examples include major shipbuilders, that is, Daewoo Shipbuilding & Marine Engineering, Samsung Heavy Industries and Korea Shipbuilding & Offshore Engineering, whose current contracts in relation to Russia add up to eight trillion won or so. What is going on is a serious risk for those holding Russian government bonds, too.
“The value of the Russian currency is likely to keep dropping and the possibility of default is rising,” the Ministry of Economy and Finance explained, adding, “South Korea’s exposure in relation to Russia is very limited as its Russian bond holdings are very small.”
The ministry held a meeting with the private sector on March 8, predicting the impact of Russia’s designation of South Korea as a hostile state. Those from the private sector called for protection from foreign exchange losses. In addition, they had discussions as to the possibility of Russia’s additional export restrictions.